The week ahead is the last in the trading month. Therefore, we should all be aware of the end of the month flows and positioning for the month to follow.
Last week ended with the U.S. dollar in a free-fall. The commodity currencies, in particular, had a spectacular week – both the Australian dollar (AUD) and the Canadian dollar (CAD) outperformed, reaching levels much higher than pre-pandemic ones.
Will the lower U.S. dollar trend continue toward the end of the trading month?
All Eyes on the Powell’s Testimonies
Unlike the previous two weeks, the week ahead is full of interesting and essential economic events. Right from the start, New Zealand’s quarterly Retail Sales Indicator will move the Kiwi pairs. If retail sales in the United States are any indication, we should expect a much better number than the forecast and thus another leg higher on the NZD pairs.
Tuesday is the day when the price action starts. Early in the European session, the U.K. Claimant Count Change will reveal the state of the labour market in Britain. The release will have a strong impact on the various GBP exchange rates, with the focus being on the GBPUSD that traded above 1.40 in late last Friday’s price action.
The North American session features the Fed’s Chair, Jerome Powell, testify in front of the Senate Banking Committee. This is the first of two testimonies, one-day apart, that the Fed’s Chair must hold twice a year. If we are to compare Tuesday’s testimony with Wednesday’s, the former is more important. Therefore, if there is something new and interesting for the markets, it should be revealed on Tuesday.
Moving toward the end of the trading week, the economic calendar is full of second-tier data. Sure, we may see some reaction on the U.S. Personal Income release on Friday or the Chicago PMI on the same day, but the dice should already be cast by the time these releases are out. Remember that Friday is the last trading day of the month, and so, traders look to either roll over their positions to the next month, prepare for the NFP in a week’s time, or book profits/take losses.