FX Week Ahead - Top 5 Events: EZ ZEW Survey, FOMC Minutes, Aussie Jobs & More
- Eurozone survey data will come into focus this week as all signs point to a continually slowing regional economy, which may inevitably give the ECB to reverse its intentions to normalize policy this year.
- The January FOMC minutes should detail a lively discussion that ultimately produced a significant shift in policy at the last rate decision, including the end of gradual rate hikes.
- Inflation data from Japan may show some stabilization in price pressures now that oil prices have stabilized in recent weeks.
Join me on Mondays at 7:30 EST/12:30 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.
02/19 Tuesday | 10:00 GMT | EUR Eurozone & German ZEW Surveys (FEB)
Typically, neither the Eurozone nor German ZEW Surveys much interest in any given month. However, over the past two releases, the Euro has moved in excess of +/-0.2% around the release, suggesting that attention has indeed returned to the ‘high’ ranked events. Certainly, provided the context of a deteriorating economic backdrop for the Eurozone, traders are proving more interested in proximal trackers of growth in order to try and ply additional insight into the European Central Bank’s next policy move. As it were, with gauges of economic data momentum continuing to sink, it’s likely that the February ZEW surveys reveal more disappointing news about the state of play in the Eurozone.
02/20 Wednesday | 19:00 GMT | USD January FOMC Meeting Minutes
The January FOMC meeting produced a new Summary of Economic Projections that hinted at a more dovish rate hike path than previously anticipated, but the most important aspect of the meeting was Fed Chair Jerome Powell’s press conference. Evidently, armed with the backing of the FOMC, the Fed Chair said that they would cease the gradual path of rate hikes and hold a “patient stance” on future moves. So, the few clues that we have should indicate a lively meeting, and therefore, a set of minutes that will contain more market-moving information than usual.
02/21 Thursday | 00:30 GMT | AUD Employment Change & Unemployment Rate (JAN)
The Australian jobs market has improved in recent months, with jobs growth coming in above expectations in both November and December 2018. The six-month average of jobs growth improved from +15.1K in July 2018 to +22.9K by the end of the year. During this timeframe, the unemployment rate dropped from 5.3% to 5.0%. For the upcoming report, the Australian economy is projected to have added +15K jobs while the unemployment rate is due on hold at 5.0%. Following commentary by Reserve Bank of Australia Governor Philip Lowe, the jobs data may run counter to the dovish undertones painted by the central bank head. With global equity markets firming up, a strong January Australian employment report could help revitalize the Aussie after its sharp drop on February 6.
02/21 Thursday | 13:30 GMT | USD Durable Goods Orders (DEC P)
Durable Goods Orders are an important barometer for US consumption, which constitutes roughly 70% of GDP. Normally, 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. For the upcoming report, it’s important to recall that the data was delayed due to the US government shutdown. The preliminary January print is expected to show a gain of 1.7% over the prior month after the 0.7% increase in November. The data may help stabilizeUS growth expectations for Q1’19, which have dropped sharply over the past week (per the Atlanta Fed GDPNow forecast) to +1.5% annualized.
02/21 Thursday | 23:30 GMT | JPY National Consumer Price Index (JAN)
Amid the rebound in energy prices in recent weeks, Japanese inflation expectations have arrested their decline and so too have official forecasts for the forthcoming January Japanese National CPI report. In recent years, Japan has imported more than 90% of its energy needs from abroad, so stabilization in energy markets can have a profound impact on topline inflation. The headline reading is due in at +0.2% in January, down from +0.3% (y/y), while the core reading – ex-fresh food – is due in at +0.8% from +0.7% (y/y). The core-core reading – ex-fresh food & energy – is due in at +0.4% from +0.3%(y/y). Still, traders shouldn’t draw any long-term implications from the data as the Bank of Japan isn’t going to be changing policy any time soon.
Pairs to Watch: AUD/JPY, EUR/JPY, USD/JPY
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--- Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher, email him at firstname.lastname@example.org
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