Weekly Comment – USD loses altitude; can NFP report rekindle summer rally?



USD finally caught up with tumbling real yields in the past week, with the Fed’s stubbornly dovish inclination intensifying the selloff mid-week. However, USD bulls shouldn’t lose hope as the June jobs report is coming up next week, along with more central bank meetings.

The highlights:
  • Nonfarm payrolls are due on Friday in the US and could jump by 900k in July. But how much of a boost would this be for the battered USD when the Fed is nowhere near committing to a taper timeline?
  • The Reserve Bank of Australia meets on Tuesday, which could spell more trouble for AUD as policymakers may backtrack on tapering plans amid ongoing lockdowns in Australia.
  • But it might be a better week for GBP as ‘Super Thursday’ lurks for the Bank of England. The BoE will likely give clues as to whether more QE is on the way after December, though its forecasts may be more telling if they imply the next round will be the last.
  • It’s been a relatively strong week for CAD and there could be more gains ahead if Friday’s employment report out of Canada points to a further jobs recovery in July. However, New Zealand’s jobs numbers on Wednesday may spur greater volatility for NZD as the RBNZ’s August rate decision may rest on the strength of the data.
  • With most of Wall Street’s heavyweights having already reported their Q2 earnings, stocks might struggle for direction in the coming days. Tech stocks in particular are on shaky ground right now.

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