Last week's news brought more inflation as year-over-year prices accelerated in Canada, the US, and the UK. In the US, core inflation (excluding volatile food and energy prices) increased by 0.2% on a monthly basis and at an annual rate of 2.9%, in line with estimates.
The report was a mixed bag, with vehicle prices falling 0.3% and apparel prices rising 0.4%. Household furnishing, which has been impacted by tariff imports, increased 1% over the month.
President Donald Trump again called for lower interest rates. “Consumer Prices LOW. Bring down the Fed Rate, NOW!!!” Trump posted on Truth Social, calling for a rate cut as high as 3 points.
Next week is criss-crossed with European news, including Manufacturing PMIs from multiple countries and a rate decision. Following last month's anticipated cut, the European Central Bank is likely to have reached the bottom for the current cycle and will maintain the main financing rate at 2.15%. Any deviations from this consensus would likely cause significant volatility.
Thus, the economic focus will be on the earnings season in the US, with market giants such as Alphabet, Tesla, Coca-Cola, and Intel reporting their earnings. Additionally, the market will hear the latest opinion from Federal Reserve Chairman Jerome Powell. The leading global central banker, whose mandate ends next year, might use the opportunity to respond to Trump's criticism.
Key News:
- Monday: NZD – CPI
- Tuesday: GBP – BOE Governor Bailey Speech
- Thursday: AUD – RBA Governor Bullock Speech, GBP – PMI, EUR – Rate decision, PMI, USD – PMI
- Friday: GBP – Retail Sales
Pairs In Focus
1. CHF SGD
This pair went through a multi-day pullback after a bullish breakout, establishing a new key level at 1.60625. If the daily price comfortably closes above this level, any subsequent pullbacks could provide buying opportunities.
CHF SGD Daily chart, Source: TradingView
If the run continues, the highs from April, around 1.62500, provide a solid target.
2. AUD JPY
This pair experienced a minor breakout earlier this month after overcoming the 95.220 resistance level. Currently, it is sitting at an equally important 96.900 level, which it needs to overcome for continuation. A clean break and a closure above previous wicks around 97.400 could provide a buying opportunity on a pullback.
AUD JPY Daily chart, Source: TradingView
The first target above would be around 99.170, and the second one at 100.200
Notes:
- AUD NZD: Rallied to establish a new swing high at 1.09750 before retracing lower. The trend has flipped bullish.
- AUD CAD: Failed to surpass the highs from April, turning lower but struggling to break below 0.88750, which remains strong support.
- AUD CHF: Consolidates in a relatively tight range around 0.52300.
- AUD SGD: After making a fresh high, it fell back in the range but failed to break lower. Further indecisiveness until either support or resistance gives way.
- CHF JPY: Continues making new all-time highs. The price has gone up for nearly two months straight.
- CAD JPY: Broke to fresh highs as expected despite mid-week volatility. The price could easily go higher toward 109.650.
- EUR AUD: Rallied but failed to break 1.78600. The higher low seems to be in place, giving this pair a bullish bias.
- EUR/JPY: Behaves similarly to CHF/JPY – the price has been going up since late May.
- EUR NZD: Rallied toward resistance at 1.96300 but failed to break it. A short-term pullback is possible.
- NZD CHF: Found support at 0.47430, before staging a late-week pullback. The trend remains bearish.
- GBP AUD: Found support at 2.04830, before rallying to resistance at 2.07. Might stay in this range until there is a clean breakout.
- GBP JPY: Failed at the third attempt to breach 199.700.
- GBP NZD: Oscillates around 2.25135, without a clean trend in play.
Note: Any opinions expressed in this article are not to be considered investment advice and are solely those of the authors. Singapore Forex Club is not responsible for any financial decisions based on this article's contents. Readers may use this data for information and educational purposes only.
