FX Weekly: 25th July 2011
Macro data from China and Europe are softening and point to a deceleration in growth but economic data in the US and Japan are holding up better
USD/JPY is likely to weaken over short-medium term because of lingering market concerns about a US sovereign downgrade and low probability of JPY selling intervention, especially given that Japanese equity markets continue to hold up well despite a strong JPY
Q2 GDP numbers are key for GBP prospects yet recent cyclical data is suggesting a very slow and cumbersome GDP path
CHF is a good barometer of the Europe/US ‘battle-of-themes’ - US concerns (CHF positive) are being countered by European relief (CHF negative). A firm resolution in either theme would be very CHF sensitive
RBA minutes from the last meeting (5th about the external environment, along with continued focus on local inflation pressures. The threat of contagion has diminished following the EU summit, although inflation readings this week could sway the RBA's bias in the near term July) suggested increased concerns
USD/JPY is likely to weaken over short-medium term because of lingering market concerns about a US sovereign downgrade and low probability of JPY selling intervention, especially given that Japanese equity markets continue to hold up well despite a strong JPY
Q2 GDP numbers are key for GBP prospects yet recent cyclical data is suggesting a very slow and cumbersome GDP path
CHF is a good barometer of the Europe/US ‘battle-of-themes’ - US concerns (CHF positive) are being countered by European relief (CHF negative). A firm resolution in either theme would be very CHF sensitive
RBA minutes from the last meeting (5th about the external environment, along with continued focus on local inflation pressures. The threat of contagion has diminished following the EU summit, although inflation readings this week could sway the RBA's bias in the near term July) suggested increased concerns
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