Weekly Currency GBPUSD,USDCHF,AUDJPY,EURJPY

GBPUSD

GBPUSD

The GBP/USD finished lower on Thursday as long investors continued to take profits following yesterday’s bearish U.K. unemployment report. The report, which took investors by surprised, showed that unemployment in the U.K. actually increased. This was the first rise in the U.K. Claimant count since 2012. The claimant count rose to 7.0K from -8.9K. The unemployment rate increased to 5.6% from 5.5%. The average wages report also missed the estimate. Traders were pricing in a reading of 3.3%. The actual.

USDCHF

USDCHF

USDCHF rally was likely triggered by hawkish comments from Fed Chair Janet Yellen. During two days of testimony before Congress, Yellen signaled that the central bank remains on track for the first rate hike in almost a decade. 

“If the economy evolves as we expect, economic conditions likely would make it appropriate at some point this year to raise the federal funds rate target, thereby beginning to normalize the stance of monetary policy,” she said. 

Once again the interest rate differential between the U.S. and Switzerland is making the U.S. Dollar a more attractive investment. Unless some unexpected news comes along to derail the U.S. economy, the Fed could begin raising interest rates as early as September and perhaps a second time in December. 

Yellen also added that the crisis in Greece and the stock market crash in China have had no effect on the Fed’s plans. Instead, the central bank’s main focus has been on the improving labor market. 

Recent data showed that the Swiss National Bank had to step into the currency market as the Greek crisis deepened last month. Although it did not intervene as intensively as it did in 2012, it is likely to remain a player because of the instability in the region. The uncertainty over Greece’s financial future remains an issue because it could have a negative effect on Switzerland’s export-reliant economy. 

Upward pressure is expected to continue to support the USD/CHF because of strengthening expectations for a Fed rate hike and the possibility that the SNB will have to intervene once again especially after Greek banks open on Monday after being closed for three weeks.

EURJPY

EUR: Path Clear for Sell-Off. Bearish.

With uncertainty regarding Greece diminished, we believe that investors will feel more comfortable reinitiating EUR shorts, as evidenced by the latest break in EURUSD below the 100 DMA. Draghi has reiterated that the ECB stands ready to act if needed, which could be enough to weigh on EUR, particularly if it supports equities, given the inverse relationship between European stocks and EUR.

AUDJPY

JPY: Still Look for Strength. Bullish.

We expect JPY weakness to reverse, and maintain our bullish view, despite the recent pick-up in equity markets. Recent data from Japanese pension funds point to the reallocation process being largely complete, suggesting that foreign outflows from Japan could slow. The latest developments in Japanese politics pose a risk to Abenomics, which could be a near-term source of support for JPY, though we believe that in the longer term this could be more concerning.

Write up taken from 

actionforex

fxempire

efxnews