The financial markets open the week quietly with Japan on holiday. The currencies markets are generally staying in Friday's range except notable weakness in New Zealand dollar. Kiwi has been under selling pressure last week since RBNZ said that it will release an unscheduled economic update this week on July 21. Some economists noted that there could be material changes in economic projections. And that should pave the way for the central bank to cut the official cash rate to 2% at the next meeting on August 11. Fresh selling is seen in Kiwi today as Q2 CPI rose less than expected by 0.4% qoq and the annual rate stayed weak at 0.4% yoy. Also release today, UK Rightmove house price dropped -0.9% mom in July.
Recent rebound in AUD/NZD suggests that the fall from 1.1331 has completed at 1.0310 already. Focus is now on 1.0741 near term resistance this week. Break will confirm this bullish case and the pair should at least have a test on falling trend line resistance (now at 1.1150) later. It's also possible that the whole corrective pattern from 1.1638 has completed with three waves down to 1.0310 already. We'll monitor the structure of the rebound from 1.0310 and assess the outlook later.
ECB meeting is the main focus of the week as president Mario Draghi would address questions regarding the impact of Brexit. The central bank is generally expected to keep policies unchanged this month. But there are speculations that ECB could hint on the possibility of further easing in September. And Euro would be vulnerable for some steep selloff in that case. Another focus will be IMF's update on its world economic outlook to be released on Tuesday. Here are some highlight for the week:
- Monday: Canada foreign securities purchases; US NAHB housing market index
- Tuesday: RBA minutes; UK CPI, PPI; German ZEW; US housing starts and building permits
- Wednesday: German PPI; UK job data; Swiss ZEW
- Thursday: Australia NAB business confidence; Japan all industry index; Swiss trade balance; UK retail sales, public sector net borrowing; ECB rate decision; US Philly Fed survey, jobless claims, house price index, existing home sales
- Friday: Japan manufacturing; Eurozone PMIs; Canada CPI, retail sales