UBS Weekly forecast on majors

Australia, Eurozone, Norway, sweden, UBS, UK, US, Weekly outlook03 July,, Limassol — Nearing the weekend, AtoZ has already provided you the highlights of yesterday’s NFP report. Displaying the unemployment rate falling to a seven-year low of 5.3 percent due to people leaving the workforce. Now, the focus has switched to the upcoming week. So get informed with these UBS’s anticipations for the next days on the major Euro, British Pound, US Dollar, Japanese Yen and Scandinavian currencies.

EUR: “Bearish biased with volatility”

For the upcoming week Greece will remain under the spotlight after this Sunday’s Greferendum. No matter what the outcome is on Sunday, negotiations are likely to continue from Monday onwards. UBS strategist Constantin Bolz commented regarding potential Greferendum impacts on financial markets: “we assume that the European Central Bank stands ready to calm markets and ensure stability in financial markets.”

UBS expectation for Euro, taking into account Greece political issues, remain bearish biased with substantial volatility: “Near term EURUSD will likely continue to be volatile, but in any event we believe that the upside for the EUR over coming months is likely to be limited and see the EUR lower from here.”

USD: “Upcoming reticent week”

Considering fundamental economic data and central bank meetings, the US is likely to have a rather reticent week. Having ISM non-manufacturing index on Monday being the only important indicator and minutes of the last Federal Reserve meeting being the most important from a central bank side.

AUD: “no rate change expected”

The Reserve Bank of Australia (RBA) will hold its ordinary meeting on Tuesday. As UBS weekly market re-cap commented “UBS does not expect a rate change, but language could turn more dovish again,” distinguished Constantin Bolz. Expressing the view on the upcoming labor market report on Thursday Bolz noted that they: “expect an uptick of the Australian unemployment rate.”


GBP: “Cable to head higher”

In the United Kingdom a new budget will be presented by George Osborne on Wednesday. It is viable that his plans for austerity could impact a subsequent monetary policy of the (BoE) Bank of England. BoE’s meeting on Thursday is possible going to be just a photo op. “Overall, we continue to see GBPAUD heading higher,” finished UBS strategist.

JPY: “Driven by international developments”

Due to oil price recovery from the March lows and expected robust machine orders, May trade balance is likely to register a bigger deficit. As Constantin Bolz stated: “However, just like the Swiss Franc, the yen should be more driven by international developments.”

We could also mention that in times of crisis JPY tends to act as a safe heaven currency, hence we could expect, especially on Monday’s market opening, a major strengthening from JPY. Of course this is my personal opinion, not of UBS.


NOK/SEC: “Important data are due”

In Norway, Friday’s inflation data will be the key event. While in Sweden, fundamental important household consumption on Tuesday and Thursday’s employment data are due.

As Sweden cuts its interest rates, we could expect major movement also taking place from NOK as well. However traders should be aware of the fact that these central banks will not enable their currencies to depreciate without enforcing tighter controls as well as going for FX interventions.

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