US DOLLAR

The market is relatively calm this morning and waits for the Fed Chair to start his two-day testimony before the House of Financial Services Committee. He is expected to underscore, yet again, that downside risks have increased and trade tensions with between the US and its international partners will have a bearing on global economic growth. However, the Fed is expected to keep its powder dry and rely on incoming data amidst changing global economic landscape. Market participants will also have a chance to dig deeper into the minutes of the last FOMC meeting and gauge the next action from the Fed. Crude oil is trading 2.25% higher and is slowly reaching the twitter-trigger point near $60 a barrel.

CANADIAN DOLLAR

The Bank of Canada is expected to deliver a bullish hold ‪at 10 am ET‬. Market is already pricing in a no-change decision and will be eagerly reading into the statement to gauge the next action. Canadian economy remains fragile with manufacturing sector in stagnation. USD/CAD is likely to be volatile post-announcement and any hint of policy divergence with the US Fed will encourage more CAD bulls. The pair lost nearly 3.45% of its spot value last month over trade tensions with China and cautious signals from Fed members.

EURO

EUR/USD is trading relatively flat around the 1.12 handle. Better-than-expected industrial production numbers out of France and Italy are providing temporary support to the shared currency. French manufacturing output increased 1.6% in May after a no-growth performance in the previous month. In Italy, the production index surprised to the upside with a bump of 0.9% in May. These numbers provide some relief to the beleaguered euro staring at a two- month low on economic concerns.

BRITISH POUND

Sterling is grasping at straws near its lowest 2019 level, after UK GDP report revealed the economy expanded by 0.3% in May. The growth was supported by positive contribution from the services and production sectors, but construction was flat slowing from a 1% rise in the prior month. Incoming economic data remains volatile and continues to inject uncertainty into the Pound. UK’s exit saga from EU took a new twist and is expected to be bumpy after the House of Commons voted to prevent the next government from bypassing the parliament.

JAPANESE YEN

USD/JPY is shedding gains, failing to breach the 109 mark. Investors is turning cautious ahead of Powell’s testimony and hence moving into a consolidation zone. Meanwhile, the Producer Price Index (PPI) declined 0.1%, missing market expectations. Soft data out of Japan is expected to weigh on the Yen once the testimony event risk clears.