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The Greenback started the week off on softer footing as investors bought up the Japanese Yen and the Australian Dollar. Asian shares were softer in overnight trading as nervous investors sold positions ahead of this morning’s US Pending Homes Sales report. The result was flows into the JPY as a safely play. Expectations are that Pending Home Sales in the US declined 1% in the month of June according to the Bloomberg consensus forecast. This is in sharp contrast to last month’s print of +6.7%. A soft Home Sales outcome diminishes the likelihood that the Federal Reserve will opt to cut any of its simulative measures  this Wednesday  when it makes is regular rate and policy announcements. The AUD also found good support as sentiment surrounding the Fed props up carry currencies like the Australian Dollar. It’s interesting to observe a scenario where the same sentiment supports both the Aussie and the Yen against the USD. This time last year such a thing would be unheard of.

It’s another exciting week ahead in the world of currencies, particularly in the US. This morning’s Homes Sales data is really just an appetizer as far as American economic data is concerned. Consumer Confidence is  on Tuesday,  Wednesday  has the FOMC & Advance Quarterly GDP,Thursday  is Manufacturing PMI, and  Friday  will see monthly Non-Farms Payrolls and Unemployment statistics released.

Elsewhere in the world of central banks, the Reserve bank of Australia is slated to make its regular rate & policy announcement during the  Monday  overnight session. Likewise the Bank of England and the European Central Bank are up  on Thursdaymorning. There is no shortage of potentially market moving data coming out this week! Oh, and for good measure, Canadian monthly GDP is scheduled to be released  Wednesday.

Speaking if the Loonie, the USDCAD has now moved in on major multi-month trend support in the upper 1.0200/ 1.0300 area. It seems unlikely that the pair will any meaningful break ahead of Wednesday’s FOMC announcement and GDP data from both sides of the border. However sustained USD weakness due to near-term tapering sentiment puts the support in jeopardy. Tapering, baring a substantial economic setback, is widely expected by markets to commence in the fall. At which time the USD is positioned to make significant gains. Any move down in the USDCAD this week could present a buying opportunity for those with short and medium term needs.

Further reading:

US Pending Home Sales: -0.4%

Japanese deflation is falling – USD/JPY follows