Forecast for the week of July 14, 2014 - July 18, 2014

July 14, 2014

For currency market players, the end of last week was marked by sharp growth in the USD/CAD pair amidst the publication of weak statistics for the Canadian labor market in June. This week the "Loonie" will probably test 1.0750 and 1.0800, considering the low probability that the Bank of Canada will raise the nation's key interest rate from its current level of 1.0%.

On Tuesday, July, 15 the British currency may break out of its two-week range of 1.7100-1.7175, sliding to 1.7050 if Great Britain's published inflation figures for June are weak. Meanwhile, the British pound's possible correction is worth using to open long positions in the expectation that Great Britain's labor market statistics, which will be published on Wednesday, will be strong.

The euro may experience the usual pressure this week from figures on industrial production, inflation, and the balance of payments in the Eurozone. In particular, if the region's current consumer inflation level remains at 0.5% (y/y) and the anticipated drop in industrial production remains at 1.2% (m/m), the euro may close below the support level of 1.3575 by the end of the week.

The behavior of the USD/JPY pair will be determined by a variety of macroeconomic statistics for the United States and Japan. If on Tuesday the Bank of Japan continues its ultra-soft monetary policy, we may see the USD/JPY pair climb to 101.70.

On Wednesday, June 16, figures from China may bolster the "Aussie" exchange rate, allowing the Australian dollar to test 0.9420. It is expected that in Q2 2014 the world's second largest economy will maintain GDP growth at 7.4% (y/y), accelerating its industrial production growth rate from 8.8% (y/y) to 9.0% (y/y). 

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