ECB hold rates until 2020

EURO

The European Central Bank pushed back their rate guidance on Thursday and pledged to remain on hold at least through the first half of 2020. The Euro rallied in response as the Governing Council stopped short of opening the door to a rate cut. EUR/USD made further gains on Friday and closed above $1.13 and the pair is holding onto that handle today despite several headlines suggesting lower rates are a possibility.

ECB President Mario Draghi speaks on Thursday while Euro Zone industrial production is out on Thursday.

US DOLLAR

The US Dollar has started the week as the strongest of the G10 currencies, bolstered by an improvement in risk sentiment over the weekend after the US and Mexico struck a deal to avoid tariffs. The Dollar Index is trading just above 96.8 having dropped to an eleven-week low of 96.46 on Friday post-payrolls – the US economy added a meagre 75K jobs in May while average hourly earnings also disappointed.

STERLING

Moves in the pound have been relatively modest of late with few Brexit related swings to note since Theresa May confirmed her resignation. Stronger than expected service PMI data released on Wednesday lent some support with GBP/USD topping out at a three-week high on Friday at $1.2763, however the pair is lower today back at 1.2680.

Industrial production figures out this morning came in below forecast at -1.0%. Average earnings and the 3-month unemployment rate are both out tomorrow.

Looking ahead, trade talks remain in focus with both China and Mexico while Wednesday’s CPI and Friday’s retail sales are the notable data releases for the week.

JAPANESE YEN

The Japanese Yen is one of the weakest G10 currencies today, weighed by an improvement in risk sentiment. USD/JPY touched a high of 108.67 overnight, its best level since May 31st as dovish comments from Bank of Japan Governor Kuroda also weighed. A modest upward revision to Q1 GDP was largely ignored.

Looking ahead, core machinery orders and PI figures are due Wednesday followed by industrial production on Friday.

SWISS FRANC

EUR/CHF is back above 1.12 this morning having not closed with the handle since May 30th. From a domestic standpoint, CPI and unemployment figures were both inline last week and largely ignored while few surprises are anticipated at Thursday’s SNB policy decision.

AUSTRALIAN DOLLAR

AUD/USD dropped back below 0.70 today. The Antipodean currency fell in tandem with the Yuan after weaker than expected Chinese trade data was released overnight. NAB confidence indicators are due tomorrow while RBA Assistant Governors Kent and Ellis speak on Wednesday ahead of Thursday’s jobs data.

CANADIAN DOLLAR

USD/CAD touched a fresh three-month low overnight at 1.3235 as the Dollar continues to derive support from Friday’s jobs report – the Canadian economy added 27.7K jobs in May as the unemployment rate dropped to 5.4%.

Data releases are sparse this week however with housing starts coming in ahead of forecasts this morning at 202.3k vs. 196k.

SWEDISH KRONA

EUR/SEK was little changed this morning with few major impulses for the Krona.

Friday’s CPI report will be the focus for investors this week with the closely watched CPIF rate seen steady at 2.0% YoY.

NORWEGIAN KRONE

EUR/NOK fell to a fresh one-week low at 9.7547 this morning as the Krone derived some support from an uptick in crude oil prices.

Tomorrow’s CPI data will be the main focus for investors this week with headline consumer prices seen at 2.9% YoY.