Crucial Releases To Keep Forex Traders Busy

Offbeat US economics continue fading expectations that the Federal Reserve could express concern for interest rate hike sooner, pulling back the US Dollar Index (I.USDX) to register consecutive second weekly decline. The Euro, even after again witnessing failed talks between Greece and its creditors, managed to gain as ZEW Economic Sentiment and German readings surpassed expectations. Further, commodity currencies, mainly AUD, NZD and CAD, remained a bit on the upside with fresh announcement of Chinese stimulus and an extended pullback in commodity prices. Moreover, Crude Oil prices maintained gains with stretched geo-political tension in Yemen, coupled with signs of decline in US shale output, spread concerns for supply disruptions.

Going forward, the current week has many important readings/events on the cards that could continue making forex traders busy. Amongst them, quarterly GDP data from the UK and the US along with three major central bank monetary policy decisions, namely FOMC, BoJ and RBNZ, could help investors determine the near-term direction in the Forex market.

US FOMC and Advance GDP q/q Could Create Headlines

Monetary Policy meeting by the Federal Reserve, scheduled for Wednesday, is an undisputed crucial event of the week where market players will continue seeking hints for the near-term interest rate hike; however, absence of press conference by the Fed Chair, generally following the rate announcement, could dilute the event’s importance. Although, downbeat economics continue restricting the FOMC from signaling accurate timelines for the interest rate hike, needless to say a surprise alteration in benchmark interest rate, some of the FOMC members are split over the view and could communicate the same to fuel USD strength.

Advance reading for the Q1 2015 GDP, scheduled also on Wednesday, becomes another important detail for the Forex market to observe. Consensus supports another disappointing print of US GDP, only a 1.0% gain, after the number witnessed 2.2% growth in Q4 2014 against noting the 5.0% gain in Q3 2014. Considering the plunge in headline economic numbers, it is more likely that the GDP print could either match the forecast or miss the mark and provide another lag of decline to the USD.

US GDP Q/Q

Other than the headline numbers, CB Consumer Confidence, scheduled for Tuesday, Pending Home Sales on Wednesday, Chicago PMI, schedule to release on Thursday, and the ISM Manufacturing PMI, on Friday release, are some of the additional details that could provide meaningful information to determine near-term USD moves. While Consumer Confidence and the Manufacturing PMIs are signaling an improvements from their prior releases, Pending Home Sales could register a lower than previous growth number.

To sum up, recent flow of negative economics may restrict the FOMC from conveying near-term interest rate hike, providing additional support to the USD bears; however, surprise majority of FOMC hawks could provide considerable strength to the greenback. Further, better than expected gains in the Q1 2015 GDP number may provide strong support to these hawkish policy makers to announce interest rate hike sooner than expected, that in-turn could provide noticeable USD gains.

Euro-zone CPI, UK GDP, Chinese PMIs, RBNZ And BoJ Are Other Events to Watch For

Rest of the global economic calendar is also busy during the week with Flash reading of Euro-zone CPI, Preliminary Q1 2015 GDP from UK, monetary policy meetings by the Bank of Japan (BoJ) and the Reserve Bank of New Zealand (RBNZ) providing important information to fuel the forex market.

To know the details of crucial economic readings, stay tuned to Forex Calendar

Flash version of Euro-zone CPI, scheduled for release on Thursday, is an important reading to see whether the QE is paying expected benefits or not. The number is likely testing five month high, to 0.0%, and could help the ECB feel satisfied with the stop in deflation. However, German Prelim CPI m/m, scheduled for Wednesday, is expected to print a negative reading and could provide a bit of Euro decline before the regional currency enjoys Euro-zone CPI reading.  Hence, a stronger than expected reading of Euro-zone CPI could support the Euro to extend its recent gains; however, a consecutive decline in the numbers is less likely to provide additional damages to the regional currency, unless there are sharp negatives, as ECB is less likely to add more easing on its QE.

Preliminary reading of Q1 2015 UK GDP, scheduled for Tuesday release, and the Manufacturing PMI, scheduled for release on Friday, are important information from Britain to determine near-term GBP moves. While the GDP reading is expected to print a bit softer number, to 0.5% against the upwardly revised previous release of 0.6%, the Manufacturing PMI is likely printing a mild improvement, to 54.6 from 54.4, in manufacturing activity. As there prevail minor differences between the forecast and prior readings, actual numbers meeting the consensus are less likely to reveal much of the GBP strength; however, should the GDP reading surpasses its previous reading it can force the BoE to spell for monetary policy tightening and can help the UK currency witness considerable up-move.

Official readings of Manufacturing and Non-manufacturing PMIs from China, scheduled for release on Friday, are important details to determine near-term strength of commodity currencies. While the Manufacturing PMI is likely to continue printing an above 50 reading, a plunge into the Non-Manufacturing PMI below 53.7 could reveal the weakness dragon nation. Moreover, a below 50 print for the Manufacturing PMI from the world’s largest industrial player is likely to witness loud repercussions and can drag the recent gains of AUD, CAD and NZD.

Monetary policy meetings of the RBNZ and the BoJ, scheduled for Wednesday and Thursday respectively, are less likely to result in altering their current monetary policies. However, comments from the BoJ Governor, in press conference following the meeting, are likely to be closely scrutinized to see if the central bank continues to show willingness to expand its economic stimulus measures further. Should the RBNZ provides a surprise hike in interest rate, that could be strongly positive for the NZD while an optimistic comment from BoJ can become strong support for the JPY to extend its gains.

With an on-going correction in US Dollar, backed by dismal economic readings, only a stronger than expected US GDP could reverse recent losses by the greenback. On a broader view, with multiple releases from major economies on cards, the upcoming week is likely being crucial to determine near-term Forex market moves.

 

Follow me on twitter to discuss latest markets events @Fx_Anil

 

Anil Panchal
Market Analyst
Admiral Markets

At any use of the analytical material taken from the site of company Admiral Markets, and the secondary publication on any other resources, the rights to intellectual property for a dealing center «Admiral Markets», the reference to the company site is obligatory.

 
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