The USD strengthened this week after last Friday’s strong NFP report. This has led to investors expecting a possible taper timeframe reveal at the Jackson Hole Symposium at the end of August. This sent both the USDJPY & US10 year yields higher. The CPI print midweek was slightly weaker than expected and that allowed the NZDUSD pair to rally higher in expectations of an RBNZ rate hike next month. The key focus going forward is going to be on Fed speakers and what their expectations are for the speed of US normalisation.

Other key events from the past week

  • USD: US CPI Aug 11: The Fed will take encouragement this week with the US CPI print a little softer than expected. This shows that some pandemic related items have ‘come off the boil’ and peak inflation may be behind the US.
  • EUR: German ZEW, Aug 12: Economic confidence in Germany took a sharp decline lower as the nation struggles with the fall out from both flooding and COVID-19. Will the ECB take a dovish tilt in September?
  • Oil: Storm clouds loom, Aug 13: Alongside OPEC’s decision this week there is also the prospect of a storm heading to the Gulf of Mexico over the weekend. A heavy storm in the Gulf could halt the oil industry’s infrastructure and send oil higher at Sunday’s open.

Key events for the coming week

  • NZD: Interest Rate Decision, Aug 18: The OiS futures markets are pricing in a rate hike next week. However, the real question is whether the RBNZ will signal if more rate hikes coming this year. Will EURNZD sink lower into the decision?
  • Seasonal trades: Find a trade, Aug 16: Q4 has been seasonally very strong for the USDJPY. Will expectations of US tapering at Jackson Hole cause the pair to run higher? Check out the strong USDJPY outlook here.
  • AUD: Labour data, Aug 19: The RBA’s August Statement on Monetary Policy forecasts reflect an upbeat outlook for 2022. The Board view the recent lockdowns as only ‘interrupting the recovery’. Will labour data confirm that view?

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