Forex markets in summer time have the tendency to range and this summer was no different. Everyone waited for August to end in order to see if ranges indeed will be broken. Unfortunately, it was not the case.
Last week saw exactly the same price action as the previous one, in the sense that the entire trading depended on one economic release or event on Friday. It as the NFP (Non-Farm Payrolls) on Friday that drew the attention and the week before still on Friday it was the Jackson Hole speech Mrs. Yellen held.
Even the price action surrounding the two events was similar on the two Friday’s at least when it comes to the EURUSD pair: first spiking higher, only to be aggressively sold and make a new low soon after.
Coming back to the NFP, the market was taken by surprise by a lower than expected number. However, the fact that the US economy managed to add over 150k jobs for the month of August, a summer month, is quite impressive.
If you consider the whole summer period, with July and June as well, then the actual numbers are averaging well over 200k, a number that comes in line with Fed expectations when it comes to hiking the interest rate.
Looking ahead, already a central bank decided on interest rates this week as RBA (Reserve Bank of Australia) kept rates at 1.5% today. It was only normal and the AUDUSD pair really enjoyed the fact that RBA did not cut again. However, over the long period, a lower AUDUSD is to be expected.
Tomorrow there’s Bank of Canada term to present its view on the Canadian economy and it will be interesting to see the reaction of the USDCAD pair as oil news influenced it so far.
Yesterday there was chatter that Russia and Saudi Arabia agreed to cooperate on freezing oil production for three months, and this brought a stronger CAD across the board. However, from a technical point of view, the USDCAD trades in a triangle that I would say will break higher and not lower so this week can be a cornerstone from this point of view.
The main event of the week will be the ECB press conference and interest rate decision on Thursday as more stimulus in the Eurozone area is expected. Maybe ECB will deliver on those expectations this September or it will wait until December. What is sure, is that the Euro will travel no matter this week’s decision and it should put an end to this summer long consolidation.