Range Bound Markets Persist Into New Week

Friday evening was fairly uneventful by way of economic data releases. Canadian CPI data came in a touch above expectations on higher gas prices, which pushed Cad back near month highs.

Most of the majors are stuck in a holding pattern. All bar the Yen, where there has been some significant movement over the last week. The UsdJpy snapped its losing streak from 111, down to new lows at 108.60, after a US Consumer Confidence beat and the latest White House sacking of Steve Bannon. Unlike most of Trumps recent firings, Bannon’s scalp was seen as a step in the right direction as his past is etched in controversy. After looking into some of his public comments I’m very surprised he managed to make it this far into the role of Chief Strategist, running the most powerful country in the world. No wonder Trump’s government seems to stumble from one drama to the next, with the people he surrounds himself with.

We have a fairly quiet start to the week ahead, with only 2nd and third tier data out this evening. The main events of the week will follow Draghi and Yellen’s speeches near the end of the week, as the annual gathering of the world’s financial elite at Jackson Hole kicks off. Last year we saw the focus shift from monetary stimulus to fiscal stimulus (governments spending more than they tax) as the world’s movers and shakers realised that monetary policy wasn’t doing the job. This was when we started to see massive government infrastructure initiatives take off. This year the focus will be on financial stability, as central bankers attempt to navigate the rocky road of increasing interest rates in a world of record debt and fragile recoveries. Traders will be looking for key takeaways from this meeting to shape their longer term views on currency direction over the next year.

We expect quiet Northern Hemisphere trading conditions for a few more weeks yet. But as always, we’ll be keeping an eye out any data surprises which are looking few and far between over the next few days.

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