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Monday’s GDP release in Japan should give a fresh direction to trading in the yen market. Japan’s second quarter GDP growth figure could be significantly revised on the downside: perhaps by more than half, from 1.9% to 0.7% on annualised basis. Should the growth data meet the pessimistic market expectations, or bring in further disappointment, the USDJPY could challenge last week's trading range top.
The rush into UK stocks and UK bonds continue, with good appetite for corporate bonds and FTSE stocks. However, the FTSE is now trading in overbought territories, which could hint at a downside correction in the short-run, before a renewed attempt to the 7000 level.
GBPUSD will be another one to watch next week, as UK inflation data is due for release, with the figures expected to remain close to zero. The flat inflation figures give room for a looser stance from the Bank of England, given that the central bank is still very far from its 2% inflation target.
Finally Eurozone inflation figures and the European Central Bank’s latest meeting minutes should give some fresh air to the euro market. The EURUSD extended gains toward the 1.12 level over the past week, and the 1.12 level is presumed as an important resistance next week. Potential dovish comments from the ECB on the economic conditions following the Brexit vote could dent appetite for the euro.