Fundamental Forecast for Japanese Yen: Bullish

• Yen Soars as Japanese GDP Disappoints, Sinking Risk Appetite
• Speculative Sentiment Points to Yen Gains vs Dollar, Pound
• Technical Positioning Hints US Dollar Breakout vs Japanese Yen

Risk sentiment remains the dominant catalyst for the Yen, with prices tracking closely in line with the perennial safety asset – the US Treasury bond.

Fundamental Forecast for British Pound: Neutral

• Pound Rallies Subsequent to BoE Minutes
• British Pound Bias Near-Neutral on Indecision

The British pound finished slightly lower against the U.S. dollar this week, down some 0.35 percent through Friday’s close.

Fundamental Forecast for Canadian Dollar: Bearish

- Crude Oil Tumbles on Dismal Data, Gold Uptrend Back in Full Force- Canadian Consumer Prices Advance 1.8% in July, USDCAD Tests at 1.0500

- Fed Stimulus Efforts Revive Fear and Dollar Bidding, European Economic and Financial Health the Next Step

The Canadian dollar continued to pare the advance from the previous month following the flight to safety, and risk trends are likely to dictate price action for the USD/CAD over the following week as the economic docket remains fairly light for the last full week of August.

Fundamental Outlook for US Dollar: Bearish

• RBA’s August minutes reveal policy makers see rates “appropriate”
• Average weekly wages rose 0.8% in the second quarter, the lowest in nearly four years
• Westpac leading index printed flat in June, which was the first non-positive result in a year.

The Australian dollar was virtually flat on the week as it took its cue from ebb and flowing risk trends.

Fundamental Forecast for New Zealand Dollar: Bearish

• Domestic Producer Prices rise for second consecutive quarter
• New Zealand Dollar range trading opportunity presents itself

The New Zealand Dollar finished the week almost squarely unchanged against its US namesake, surviving a noticeable turn lower in the US S&P 500 to close the week where it began.

Fundamental Forecast for Gold: Neutral

• Gold deviates from risk trends, responds to signs of tempered financial risk
• After carving a steady bull trend through August, is gold close to forming a top?

In the past two weeks we have seen a sharp tumble in risk-based assets and then a moderate correction as congestion took over.

The Week Ahead

Highlights

• USD recovery, risk sell-off likely to continue
• Weber comments soften the euro
• Australian election this weekend
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