EURUSD 1.2883 RANGEBOUND
GBPUSD 1.9080 RANGEBOUND
USDJPY 115.13 RANGEBOUND
USDCAD 1.1194 RANGEBOUND
USDCHF 1.2232 RANGEBOUND
AUDUSD 0.7662 RANGEBOUND
EURUSD
Euro long term implieds reversed last weeks climb and descended on the week offering suggestions of a range bound environment, at least in the short term. The notion is supported by a corresponding dip in the models differential as the underlying spot comes up on major resistance at the 1.2900 barrier, stalling over the past couple of sessions. With summer still upon us, granted we are nearing the end, the implied dip can be expected with further consolidation leading into September. However, with the aforementioned level a main focus right now, a short burst in volatility should not be ruled out on a directional break.
GBPUSD
Similar to the Euro counterpart, sterling implieds are signaling rather lackluster activity in the underlying spot currency. Although rising and suggesting a breakout scenario last week, longer term implieds have pulled back a little in the wake of the surprise Bank of England decision. Subsequently, the differential is also making consecutively lower highs and looks to flip the zero line supporting the short term notion. Hovering just below a pivotal resistance at the moment, the scenario is likely to play out. However, a short term hop cannot be ruled out should the level fail to hold.
USDJPY
Longer term implieds for the Japanese yen continued the downward trend after blipping higher last week. The underlying spot could not be more reflective as the USDJPY pairing has remained in consolidation now for almost seven consecutive sessions, between the 114 and 116 figures. Further consolidation looks favored at the moment as the market continues to sort out the Japanese economic picture and US dollar strength. However, event risk still looms in the air with the Bank of Japans monetary policy meeting this week and increased speculation over a possible Chinese yuan revaluation effort. Both are likely to offer the Japanese currency a lift in the near term should a surprise surface.
USDCAD
The Canadian picture has not improved or offered any direction in the course of the week as the underlying spot price remains in the same range, pinned by resistance at the top of 1.1400 and support at 1.1000. Now in the middle of the range, indifference is seemingly increasing. With price hovering at the 1.1200 handle, the spread differential has remained the same for the past couple of sessions, slightly dipping below the zero line as the longer term implied measure counters with an upturn. At this point, range bound scenarios are surely to play out. However, with the US trade balance event risk fast approaching, the notion may be shortlived heading into the weekend.
USDCHF
Swiss vols decreased immensely during the week as the underlying currency was subject to a bout of consolidation as had the other major currencies. Now hovering support at the 1.2200 figure, range bound suggestions are emerging as the longer term implied measure remains underwater and the differential turns to the zero line. However, as in much of the market heading into the second half of the week, the upcoming US trade balance figure is expected to pose some event risk and kick both components higher. As a result, the market can expect momentum on a directional break and increased activity.
AUDUSD
Yet another major pair subject to consolidation, the Australian dollar has been pegged between the 0.7700 and 0.7600 figures for the past week. Following the jump in vols after the Reserve Bank of Australias interest rate decision, differentials have taken a slide below the zero line, confirming the range suggestion being put forth by the longer term implied component. As a result, further consolidation looks imminent in the near term. Subsequently, the US trade balance report is likely to serve as another momentous spark for the markets. However, the event may not ring as important for the carry trade candidate.
