• The week ahead: central banks and US data
  • JPY trades in tandem with risk
  • Euro and pound under pressure
  • The Turkish lire [finally] catches a break

It’s a big week for currency markets, highlighted by a spattering of US data including the monthly employment report alongside interest rate decisions from the Federal Reserve, the Bank of England, and the Bank of Japan. Although investors are not expecting the Fed to implement policy changes, the meeting minutes will be poured over in search of language that could hint toward whether the Fed is inclined to change the expected pace of rate hikes.

The pound is lower this morning, heading toward the first three-day fall against the dollar this year. The Bank of England’s inflation report Thursday is a key item to watch out for after hints that the bank will upgrade its economic forecast in their first policy meeting this year. Despite the more hawkish tones that usually indicate that the bank is partial towards a more aggressive pace of interest rate hikes, the uncertainty over Brexit may well keep their positivity under wraps. Overnight pressure on the euro brought EURUSD down a cent, but the losses were pared just as the US markets stepped in.

Overnight Japanese retail sales pushed USDJPY near 115, but the yen has shrugged off this weak report as investors take a more macro-view of risk appetite. President Trump’s immigration ban has stirred concerns for global risk, and as they take stock of the widespread protests to the ban, the yen strengthened as a safe haven from this uncertainty.

The Turkish lira, one of 2017’s worst performing currencies, surged ahead this morning – despite two of the biggest global credit agencies downgrading Turkey’s economic prospects. Fitch knocked their sovereign debt rating to “junk” after Standard & Poor’s moved their outlook from “stable” to “negative”. The doom-and-gloom prospects for Turkey are not new, and the rally is a welcome reprieve for the Turkish currency which has depreciated around 8% against the USD this year. The lira now sits more than 1.8% higher against the USD on a daily basis.

EURUSD:   Overnight pressure brought EURUSD down a cent, but the losses seem capped for now.

GBPUSD:  GBP struggling to push lower, bouncing off the support level at 1.25.

JPYUSD: Dollar/yen hits session lows after Trump’s ban leaves investors unsettled.

USDCAD: CAD stronger as hedge fund managers are betting on long-term oil. OPEC, you’re doing something right.