Weekly Report

Market analysis

Highlights:

• EUR/USD : Retreats as dollar rebounds
• GBP/USD : Backs off two-week high
• USD/JPY : Bounces back amid fresh rate hike hopes
• USD/CAD : Climbs after Canadian data disappoints
• Gold : Falls amid Dollar rally
• Crude Oil : Slips but remains close to 7-week highs

EUR/USD

Retreats as dollar rebounds

The EUR/USD moved into the new week at 1.1320 near its highest price this quarter. The euro was up almost 1.5% on the week and 4.25% on a year to date basis. As traders are out of their office on summer vacation volumes are expected to be light and politicians are also on holiday as well as bankers which should leave the news light. The dollar recovered some poise after hitting seven-week lows against the yen and the euro earlier this week while equity indices struggled on both sides of the Atlantic as a six-session rally for oil prices ran out of steam. In the euro zone, data showed that the consumer price index fell 0.6% in July, compared to an initial estimate for a 0.2% rise. Year-on-year, consumer prices rose 0.2%, in line with expectations. Spot kept the composure despite final inflation figures for the month of July have contracted 0.6% on a monthly basis, a tad more than preliminary prints showed (-0.5%). On an annualized basis, consumer prices in the region rose 0.2%, matching estimates.

On the week, the single currency rose 1.5% against the dollar, the second weekly gain in a row. In the week ahead, traders will also be looking to Tuesday’s survey data on euro zone business activity for fresh signals on the health of the region's economy in wake of Britain's vote to exit the European Union earlier in the summer.