End of Week Market Report for HUBFX: Key Highlights and Market Movements

Welcome to the Weekly Forex Report, your go-to source for analysing the latest forex market trends. This week’s report covers the rise of USD/JPY and the impact of falling Canadian retail sales.

A Big Day for Canada

In this Weekly Forex Report, we explore key movements, Canada took centre stage in the market spotlight, with important data releases that provided further clarity on the country’s economic direction. The Canadian Retail Sales and Producer Price Index (PPI) were due today, marking significant points on an otherwise quiet data calendar. However, the weak numbers in the RBC Retail Sales Tracker raised concerns, suggesting downside risks to the advance August retail sales reading. HUBFX analysts were watching this closely as it might set the tone for further economic adjustments in the coming months.

The Bank of Canada (BoC) also grabbed attention with Governor Macklem’s comments. He hinted at the possibility of larger rate cuts if inflation and growth were to weaken further. This dovish stance continues to influence the CAD, with traders anticipating the next steps from the central bank amidst softening CPI numbers.

Currency Movements: A Volatile Week for JPY

The Japanese Yen was a standout currency mover this week. The volatility arose following the press conference from Bank of Japan (BoJ) Governor Ueda. Despite confirming that Japan’s economy is on a moderate recovery, Ueda’s indication that markets remain unstable and that there is no immediate rate hike in sight led to a significant selloff in the Yen. As a result, USD/JPY rose by over 1%, climbing past the 144.00 level.

On the other hand, GBP/USD saw gains following positive UK retail sales data. However, these gains were later pared back, with the pair hovering below 1.3300 by the week’s end. Meanwhile, other major currency pairs such as EUR/USD and USD/CAD saw choppy price action, with markets still awaiting clearer directional cues from upcoming data releases.

Fed’s Easing Cycle

The Federal Reserve commenced its easing cycle this week, cutting rates by 50 basis points. This larger-than-expected cut was seen as an insurance move, signalling two more 25 bps cuts by the end of the year. The market was prepared for this, and while Treasury yields continued to rise, the US Dollar didn’t gain the boost many expected. The focus now shifts to US economic data in the coming weeks. Stronger numbers could lead to higher Treasury yields, supporting the greenback, while weaker data may increase the likelihood of more rate cuts, further weighing on the USD.

Commodities Update: Gold Hits New Highs

Gold surged to new record highs this week, topping $2,600, as the market priced in the Fed’s dovish stance. The fall in real yields drove this precious metal higher, as inflation expectations outpaced nominal yields. The outlook remains positive for gold, with bullish traders expecting further upside as long as the economic data remains soft. Traders on HUBFX are positioning themselves cautiously, eyeing the next leg of the rally as buyers lean on trendlines for support.

Crude Oil remained resilient as traders bet on a boost from the Fed’s rate cuts. With record-low positioning in oil, sentiment remained bearish, but contrarian investors see potential upside if economic activity picks up, particularly in manufacturing sectors.

What to Watch Next Week

Moving into next week, the Weekly Forex Report focus will remain on central bank policy, particularly from the BoC and Fed. With the global economic landscape evolving, HUBFX remains committed to providing insights and guidance for its clients. Economic data from the US and Europe will be key in determining market direction, especially for major currency pairs. Additionally, developments in the commodities market, particularly in oil and gold, will continue to provide trading opportunities.

Stay tuned to HUBFX for more detailed market analysis and insights as we continue to navigate these turbulent markets.