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
