Oil Crumbles, Cable Reverses and the Dollar Continues with Bullish Structure. Bull Flag Break Opens Door for Continuation. Gold, USD Strong Inverse Correlation and in Confluence. Fundamental Forecast for the US Dollar: Want to discuss the market outlook with a DailyFX analyst? Sign up for a live webinar!

The US Dollar finds itself caught between a brazenly confident Federal Reserve and skeptical financial markets. The central bank has shrugged off a run of weak economic data and fizzling inflation, dismissing these setbacks as temporary and promising another rate hike before the year is out. Officials have also laid out plans to accelerate tightening by starting to scale dow n the bloated post-crisis balance sheet. Investors have not resolved to overlook worrying news-flow as readily.

Expectations priced into December Fed Funds futures show the markets expect the policy rate to remain within the current basis point target range. Put another way, they expect that rate hikes are done for the year.

A thin offering of top-tier scheduled event risk leaves markets without an obvious catalyst to tip the scales for most of the coming week. That will leave it up to a steady stream of comments from Fed officials to set the tone, which may bode well for the US unit. The influence of US political uncertainty risk remains an ever-present wildcard however.

The investigation into possibly improper contact between Russian officials and the Trump campaign is probing higher up the food chain. Indeed, independent counsel Robert Mueller is reportedly investigating the President directly on potential obstruction of justice charges. This means that whatever may be happening around financial markets, it is now a given that a bombshell revelation of some sort may emerge unannounced with drastic consequences.

If market-wide risk appetite evaporates in such a scenario, the markets may well conclude that the Fed will be forced to the sidelines whether it likes it not, sending the Dollar lower. The Euro finished last week in the middle of the pack, lagging behind the resurgent commodity currency bloc in what appears to be driven by profit taking rather than a material improvement in the commodity space.

The Citi Economic Surprise Index for the Euro-Zone closed last week at This reading means that economic data releases have been producing fewer and fewer upside surprises — momentum is waning.

The corresponding decline of inflation expectations may be holding back the Euro in a way directly related to the European Central Bank. No doubt, the ECB and President Mario Draghi have taken careful, measured steps at recent policy meetings in order to signal that their accommodative policy will be lingering around through at least There are thus two antidotes the Euro could use to end its lull in the near-term: The latter would be better than the former for the Euro.

To contact Christopher, email him at cvecchio dailyfx. Follow him in the DailyFX Real Time News feed and Twitter at CVecchioFX. Fundamental Forecast for Japanese Yen: With market participation likely to remain light throughout the summer months, the global benchmark equity indices may continue to consolidate over the near-term, and the dollar-yen exchange rate may exhibit a similar behavior especially as the new updates coming out of the Federal Open Market Committee FOMC fail to boost interest-rate expectations.

Even though Fed officials see the benchmark rate climbing to a fresh threshold of 1. Treasury Yield remains depressed and trades near the low 2. As a result, the voting-members New York Fed President William Dudley , Chicago Fed President Charles Evans , Vice-Chair Stanley Fischer , Dallas Fed President Robert Kaplan and Fed Governor Jerome Powell scheduled to speak next week may respond by striking a more hawkish outlook for monetary policy, and the central bank may show a greater willingness to start unloading the balance sheet later this year as the U.

The failed attempt to April-low 1 In turn, the dollar-yen exchange rate may continue to work its way towards the monthly C heck o ut the Quarterly DailyFX Forecasts for a dditional t rading i deas.

Retail trader data shows The number of traders net-long is 2. For m ore i nformation on r etail s entiment, c heck o ut the new gauge developed by DailyFX based on trader positioning. Sign up for David's e-mail distribution list.

Fundamental Forecast for GBP: It was a relatively strong week for the British Pound, as the currency posed gains against the Euro, the Yen and the U. Inflation numbers for May were released on Tuesday, and U. This is up from the 2. Two days later, the Bank of England took on a hawkish tilt at their rate decision, voting to keep rates flat with Michael Saunders and Ian McCafferty joining Kristin Forbes in dissenting, instead voting in favor of hiking rates. This would put the BoE in the unenviable position of having to choose whether to a tighten policy to quell GBP weakness while attempting to temper inflation or b loosen policy even more to prod growth and employment, while risking even larger losses for GBP and even stronger rates of inflation.

After meandering in the in the 1. As we warned at the time, a large portion of that move was likely short cover as a heavily short market met was met with another batch of uncertainty around what was already an uncertain situation Brexit, itself.

Further — the most hawkish member of the BoE, Ms. Kristin Forbes, is leaving the MPC at the end of the month, so one of those three votes will no longer be voting for the Bank of England. Mark Carney is fairly invested here , so, at the very least, there will probably be some dovish lobbying within the bank as we near future rate decisions. Contact and follow James on Twitter: Fundamental Forecast for Gold: Gold prices are dow n for the second consecutive week with the precious metal off by more than 0.

The losses come on the back of a flurry of central bank rate decisions and although prices remain under pressure, technical support early next week could offer a reprieve to recent sell-off. Find out what current Gold positioning is saying about the current trend. Get more information on Sentiment here Free!

EUR/USD - Live Rate, Forecast, News and Analysis

Gold prices have were unable to make a weekly close above key resistance at yet again this month, with the pullback now eyeing weekly support -backed closely by a basic trendline extending off the late-January low.

The break of the monthly opening-range lows also shifts the focus lower heading into the monthly close. That said, a key support barrier looms just lower and may limit the losses near-term heading into next week. A closer look at price action sees gold continuing to trade within the confines of this descending pit chf ork formation with prices holding just below the line into the close of trade on Friday. Follow Michael on Twitter MBForex contact him at mboutros dailyfx.

Fundamental Forecast for CAD: The Canadian economy is benefitting from the central banks past policy decisions and pushing ahead, according to commentary from government officials, giving the currency an upward boost, despite lowly oil prices. In addition, a day earlier, BoC deputy governor Carolyn Wilkins said that the strengthening economy had been largely driven by a robust labour market, another hat-tip to prior monetary policy decisions.

And the Loonie rally happened despite the oil market hitting multi-weak lows, a move that would in the past have sent the Canadian dollar spinning lower. The day moving average moved below the day ma, normally a trend-changing signal and highlighting potential ongoing USD weakness against CAD. The USDCAD low of 1. A look at the IG Client Sentiment Indicator also shows retail traders are still net-long of USDCAD, a signal that the pair may fall further. Fundamental Australian Dollar Forecast: Keep your Australian Dollar trade strategy sharp with the DailyFX Trading Guide.

The Australian Dollar reaped the benefits of foreign and domestic data surprises which went its way last week.

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The tone was set in the US by Consumer Price Index numbers which missed expectations. The Federal Reserve pressed on with plans to raise interest rates and expects to do so again this year. But those weak inflation prints have certainly sowed doubts about more aggressive monetary tightening in market minds. The prospect that said hike may not come, and even if it does that there will be few more, is clearly Aussie supportive. Then came that domestic data. The Australian labor market had a blockbuster May.

Even more encouragingly, full-time job creation was back on track too, and then some. Previous data had been worryingly light in that respect. So what of this week? A lack of likely market movers could leave the currency struggling for reasons to build on its gains. After all, while lower Australian rates are now all but priced out for the foreseeable future, no rises are expected either, according to rate-futures markets.

By the same token there are no obvious traps lurking for a clearly more bullish Aussie Dollar either. Tuesday might offer modest action. Contact and follow David on Twitter: Fundamental Forecast for NZD: The Reserve Bank of New Zealand meets on Thursday morning local time and a rate move would be a huge surprise.

That could be as far away as late next year. As the chart above shows, NZDUSD has been climbing since mid-May. However, that rally has run out of steam and for the past few sessions the pair has traded sideways. The data imply that GDP growth this year could be nearer 3. This all suggests a neutral bias for NZD , although IG Client Sentiment data suggest that NZD USD could resume its uptrend once the current consolidation period ends.

Retail trader data show In fact, traders have remained net-short since May 24 , when NZD USD traded near 0. The number of traders net-long wa s 1. We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests NZDUSD prices may continue to rise.

Traders we re further net-short than Thursday and last week, and the combination of current sentiment and recent changes gives us a stronger NZDUSD-bullish contrarian trading bias. To contact Martin, email him at martin. Follow Martin on Twitter MartinSEssex. Check out the free DailyFX Quarterly Forecasts. Market News Headlines getFormatDate 'Wed Jun 21 Technical Analysis Headlines getFormatDate 'Wed Jun 21 Bull Flag Break Opens Door for Continuation getFormatDate 'Wed Jun 21 Education Beginner Intermediate Advanced Expert Free Trading Guides.

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The Loonie hits a three-month low against the USD. Monetary Policy, not the oil price, drives the recent sharp move. Will the BoC hike rates in ?

Bullish The Canadian economy is benefitting from the central banks past policy decisions and pushing ahead, according to commentary from government officials, giving the currency an upward boost, despite lowly oil prices.

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Related Articles Previous Articles From AUD Related Prev Articles getFormatDate 'Sun Jun 18 Interest Rates on Hold Indefinitely getFormatDate 'Sat Jun 17 Financial markets, economics, fundamental and technical analysis. Neutral The Reserve Bank of New Zealand will keep its official cash rate at 1. The New Zealand Dollar needs a new catalyst after its recent rally ran out of steam. Check out the DailyFX Economic Calendar and see what live coverage of key event risk impacting FX markets is scheduled for the week on the DailyFX Webinar Calendar.

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