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FX Markets Turn to RBNZ on Wednesday, EZ & US CPI at End of Week

FX Markets Turn to RBNZ on Wednesday, EZ & US CPI at End of Week

Talking Points:

- The last week of September brings focus back to the United States, with several key data releases over the course of the week, including an inflation print on Friday that the Fed will have their eye on.

- Economic data out of Europe is sparse this week, with no ‘high’ rated data releases for the UK and only one worthwhile release for the Euro-Zone.

- The newswire remains a prime source of risk for the Japanese Yen and US Dollar: North Korea’s provocative missile tests won’t be ending any time soon as it seems acceptance as a nuclear power.

Join me on Mondays at 7:30 EDT/11:30 GMT for the FX Week Ahead webinar, where we discuss top event risk over the coming days and strategies for trading FX markets around the events listed below.

09/27 Wednesday | 12:30 GMT | USD Durable Goods Orders (AUG P)

Durable Goods Orders are an important barometer for US consumption, which constitutes roughly 70% of GDP. Typically, consumers hold off on buying durable goods during poor economy conditions; thus, improved orders suggest confidence among American consumers with respect to their future financial security. The preliminary August print is expected to show an increase of +1.0% over the prior month after the -6.8% decline in July. Given the expectation for a rebound after steep drop – not atypical to see Durable Goods oscillate violently throughout the year – a small beat could prove reaffirming for the greenback.

Pairs to Watch: EUR/USD, USD/JPY, DXY Index, Gold

09/27 Wednesday | 20:00 GMT | NZD Reserve Bank of New Zealand Rate Decision

The RBNZ has the potential to hit the Kiwi via commentary on the exchange rate. At both the June and July meetings, the RBNZ noted to some extent that ”A lower New Zealand dollar would help rebalance the growth outlook towards the tradables sector.” While the New Zealand Dollar has traded mostly sideways over the interim period since the last RBNZ meeting, policymakers will likely make note of the Kiwi exchange rate once more. The Q2 inflation report remains the most recent set of price data on the economy we have, and with inflation below the RBNZ’s +2% target, there is little reason to suspect a significant shift in tone towards something more hawkish.

Pairs to Watch: AUD/NZD, NZD/JPY, NZD/USD

09/28 Thursday | 23:30 GMT | JPY National Consumer Price Index (AUG)

Inflation in Japan has steadied in 2017, after spending the end of last year near deflation territory. The National Consumer Price Index is expected to show a tick higher from recent readings, up to +0.7% in August, from the +0.4% increase in July (y/y) - the same readings seen in May and June. Needless to say, such soft inflation falls well short of the Bank of Japan’s +2% medium-term target. At last week’s BOJ meeting, the central bank said that loose monetary policy would remain in place for the foreseeable future and underscored this notion by pushing back the expected timeline for when the Japanese economy would achieve +2% inflation.

Pairs to Watch: AUD/JPY, EUR/JPY, USD/JPY, Gold

09/29 Friday | 09:00 GMT | EUR Euro-Zone Consumer Price Index (SEP A)

Inflation remains low in the Euro-Zone, despite near-term advances on the headline CPI figures. European Central Bank President Mario Draghi, in the central bank’s meeting in September, made clear that the central bank believed that inflation would continue to rebound, however, despite recent advances in the Euro exchange rate. While the advance in the headline is only due to be minor – from +1.5% to +1.6% y/y – it should be a ‘good enough’ reading to keep the ECB’s eye on a potential QE taper as early as next month. This is the only significant event on the calendar all week for the Euro.

Pairs to Watch: EUR/GBP, EUR/JPY, EUR/USD

Read more: Euro Left to Whims of Other Major Currencies Until CPI Report on Friday

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher, email him at

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.