• IP for China, EA, and the US
• Retail sales for China, US, and the UK
• Labor market update for UK and Aussie
• CPI for UK, EA, and Canada

Headline risk remains on EM currencies, US-China trade war news and renew Turkey currency crisis news are the key drivers. The risk-off bias of the market typically favors JPY against MXN and ZAR. Besides, JPY crosses are under immense pressure as Turkey tensions detreated the traders’ confidence.

Traders should focus heavily on China data releases and Aussie labor market update in Asian-Pacific zone, besides UK related data risk events in Europe accompanying by US 3Q data releases.  Escalating US-China Trade tensions and “No-deal” headlines have been remaining higher since past few weeks.

China IP and Aussie labor market update are the key risk events investors will focus. In June Australia economy created 50,900. The Reserve bank said last week in the August meeting “Employment growth continues to be faster than growth in the working-age population. A further gradual decline in the unemployment rate is expected over the next couple of years to around 5 percent.” Whereas the central bank raises the concerns on wage growth “Wages growth remains low. This is likely to continue for a while yet, although the improvement in the economy should see some lift in wages growth over time.”

The Aussie traders are also remaining focus on the offshore headlines, i.e., escalating US-China trade tensions.

It was quiet in the European data front, whereas the single currency hit by the Turkey crisis. The week ahead update to EA GDP and UK labor market update, CPI and Retail sales are the key risk event to the pound. We could see wild swings around the UK data releases. UK political risk and no-deal factors have dominated the price action in GBP in the past few days, and we expect the GBP is pricing the negatives.
The week ahead external factors will drive the euro, especially Turkey crisis.

The dollar index (KTM: DXY) settled above the two-month range last Friday on the back of geopolitical concerns. The dollar dominion over the EM currencies extends this morning with TRY and ZAR dropped nearly 10% each. The week ahead we are actively focusing on July IP and Retail sales (Wed).

JPY crosses are under immense pressure as Turkey currency crisis spillover across the financial markets. In Asia, global equity markets are under pressure this morning with Hongkong, Malaysia, and Japan down 1.5% each, India down by 0.8% and the US futures are down by 0.60%.

As we forecasted in today’s morning note ZARJPY beaten down heavily.

Read: With the currency crisis in Turkey, we expect the JPY remain elevated in the coming days, especially against the EM currencies MXN and ZAR.

Watch this space in the European session for JPY/ crosses charts.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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