Last week China was the protagonist of a series of events which turned markets upside down. With a few surprise interest rate cuts, China hopes to revive their economy and reach their GDP goals. The reaction of the markets was instantaneous, partially due to the chain reaction effect the rate cuts can have on global economy, and also because of the unclear reason for this move. This week we expect to see some more developments arising from China, but also we have a wave of scheduled economic events, for which the market will have to respond.
Monday – Japanese GDP is expected early morning. We have seen contraction in the past quarters, and we expect to see a more stable number. A surprise announcement might help the JPY against peers.
Thursday – Bank of Japan has talking down their currency lately, even though the economy has been contracting, and Thursdays policy statement & press conference will shed some light into any future plans. If we hear the same story the USDJPY pair will fly higher.
Monday – The US Empire State manufacturing data will give us hints with regards to the effect of the strong dollar on trade activity. Anything better than the forecasted number will provide some support for the strong dollar, and on the contrary we should see some selling activity.
Wednesday – The market is looking forward for the US inflationary data, as a way of predicting future moves, or any FED action (rate hike in September). Analysts are expecting a 0.2% increase, and anything better than that will enable USD bulls to ride the currency up. It will also increase the chances of a rate hike in September.
Later in the day the FED will release their last meeting minutes. We should be cautious here and not be afraid to over-analyze our trading activity even at the cost of missing an opportunity.
Thursday – The FED is awaiting for a sign of improvement for an important indicator like manufacturing in order to make their case for a September rate hike, so a number above 5.7 should be a positive sign for the USD.
Tuesday – Pay attention to meeting minutes, which will be released early morning, for hints of further easing. Anything bringing back the discussion on further easing will affect the AUD negatively.
Tuesday – Inflation data about the UK economy are due early morning. The pound will follow the data in either direction.
Wednesday – Any slow down in UK retail sales will bring the GBP down as well. Watch for a positive number before riding the pound.
Friday – AUD and NZD depends on Chinese economy and they are affected by important events like the Chinese Caixin flash manufacturing PMI. Watch these data closely for any impact on your AUD and NZD trades.
Friday – The European PMI missed the expectations last month. Watch the data closely as a miss this month will pressure down the Euro.
Friday – Canada needs to see some positive numbers in order for their Central Bank to not deliver another rate cut. Any such cut will be felt immediately by the CAD.