The US dollar ended with sharp rise on tax reform plans. We expect further gains on USDJPY to 114 in coming week. Euro failed to break weekly high but reversed previous gains . All eyes on next week ECB monetary policy whether Mario Draghi will express hawkish or dovish taper which will drive the direction of EUR/USD either way.
GBP/USD fall back to last week low and rebounded at support near 1.3090. Interestingly GBP/JPY broke daily resistance and hit as high as 149.83. We expect the rally may continue to 150.50 by end of next week.
New Zealand’s dollar tumbled over 100pips after the opposition Labour Party won the support of NZ First Party to form a new government, raising uncertainties over direction for the central bank and on immigration. Further weakness on kiwi dollar can be seen to 0.6925 first followed by eventual target around 0.6805 in coming months.
Loonie dropped further after weak retail sales and inflation data last Fri breaking the resistance for USD/CAD. With the recent soft data, BoC may remain cautious on policy outlook thus further weakening of CAD is expected may push USD/CAD to 1.2700 level.
This week key economic events:
