FX Week Ahead - Top 5 Events: Australia Inflation; BOC Meeting; US GDP and More
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- 04/24 WEDNESDAY | 01:30 GMT | AUD CONSUMER PRICE INDEX (1Q)
- 04/24 WEDNESDAY | 14:00 GMT | CAD BANK OF CANADA RATE DECISION
- 04/25 THURSDAY | ~01:00 GMT | JPY BANK OF JAPAN RATE DECISION
- 04/25 THURSDAY | 12:30 GMT | USD DURABLE GOODS ORDERS (MAR P)
- 04/26 FRIDAY | 12:30 GMT | USD GROSS DOMESTIC PRODUCT (1Q A)
- FX TRADING RESOURCES
- The Q1’19 Australia inflation report will help keep the RBA on hold for now, but traders shouldn’t dismiss rising odds of a rate cut later this year.
- With oil prices continuing their rebound, the Bank of Canada is no longer expected to cut rates over the next six-months.
- The initial Q1’19 US GDP report is expected to show that concerns over a recession induced by the US government shutdown were overblown.
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.
04/24 WEDNESDAY | 01:30 GMT | AUD CONSUMER PRICE INDEX (1Q)
Due in at 1.5% from 1.9% (y/y), the Q1’19Australia inflation report is expected to be another signpost for the RBA that necessitates neutrality in its policy stance in the near-term and perhaps more dovish considerations by the end of the year. Even though labor markets have continued to improve in recent months, a lack of wage growth and rising indebtedness of households (already at all-time highs) makes for a concerning future for consumption trends.
Read the full report: Q1’19 Australia Inflation Report & AUDUSD Price Forecast
04/24 WEDNESDAY | 14:00 GMT | CAD BANK OF CANADA RATE DECISION
Overnight index swaps are pricing in a 7% chance of a 25-bps rate cut through July 2019. Through September 2019, odds of a rate cut only increase to 18.9%.As such, we’re expecting the BOC to signal that it’s firmly in a neutral policy stance, with the continued implicit understanding that oil prices will help guide the next rate move.
Read the full report: April Bank of Canada Meeting & USDCAD Price Forecast
04/25 THURSDAY | ~01:00 GMT | JPY BANK OF JAPAN RATE DECISION
The Bank of Japan remains mired in its three-decade war of attrition with deflationary pressures, and 2019 has yet to prove successful in getting topline inflation readings back towards the BOJ’s medium-term target of +2%.The March National Japanese CPI report came in at a paltry0.5%, the core inflation reading (ex-fresh food) came in at 0.8%, and the core-core inflation reading (ex-fresh food and ex-energy) came in at 0.4% (y/y). It’s fairly predictable that the BOJ will remain one of the world’s most dovish central banks for the foreseeable future.
Read the full report: April Bank of Japan Meeting & EURJPY Price Forecast
04/25 THURSDAY | 12:30 GMT | USD DURABLE GOODS ORDERS (MAR P)
The US economy revolves around consumption trends, given that approximately 70% of GDP is accounted for by the spending habits of businesses and consumers. As such, the Durable Goods Orders reportmake for an important barometer of the US economy. The preliminary March print is expected to show a gain of 0.6% after the 1.6% drop in February.
Read the full report: March US Durable Goods Orders & USDJPY Price Forecast
04/26 FRIDAY | 12:30 GMT | USD GROSS DOMESTIC PRODUCT (1Q A)
The Bloomberg News survey is calling for US GDP to come in at 2.2% annualized. Depending upon where you look, estimates vary. The New York Nowcast estimate for Q1’19 US GDP is only at 1.4%, while the Atlanta Fed GDPNow model is pointing at 2.8% growth. Regardless, it does appear that any near-term concerns about the US economy dippinginto a recession were overblown.
Read the full report: Q1’19 US GDP & EURUSD Price Forecast
FX TRADING RESOURCES
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--- Written by Christopher Vecchio, CFA, Senior Currency Strategist
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