Sneak peek

Major ECB policymakers’ remarks last week cast doubt on the likelihood of a major stimulus package promised by Draghi. EUR/CAD could head higher if ECB under-delivers.

With Canada’s economy going strong, Governor Poloz may continue to monitor data and keep rate cuts on the table. CAD/JPY could rise but further upside could be limited.

RBNZ could hint that they are looking for further easing amidst escalation of the US-China trade war. NZD/JPY could fall further.

With risk sentiment shifting towards risk-off, a stronger NFP will only provide a better short entry. USD/JPY could break critical support at the 106.80 price level.

As Fed’s cut is most likely a preventive move and insurance against risk, Fed may not open doors for additional easing. USD/JPY could fall initially after rate cut is announced before rising.

Despite the increase in the probability of a cut tonight, Draghi may change his forward guidance while keeping rates unchanged. EUR/USD may rise higher as market may start to price in Fed’s cut later...

Both Powell’s testimony and Bank of Canada’s monetary policy announcement are happening tonight. We should expect huge volatility in USD/CAD.

If Powell were to maintain his neutral stance on forward guidance, dollar could strengthen as Fed Fund Futures is already pricing in a 95% cut in September. Short EUR/USD?

A weaker retail sale could cause the US yield curve to steepen, resulting in a stronger dollar due to US yield curve correlation with the dollar index. Long USD/JPY?

As RBA’s optimism last week was largely due to labour data, a stronger data tomorrow could boost the Aussie dollar. Short EUR/AUD if data surpasses expectations.