Weekly Fundamental Forecast: FOMC; BoJ; US, EZ and UK GDP Top Busy Docket
The economic calendar is overloaded with event risk that is both known for heavy market impact and for its growing systemic importance. What should you keep track of for trading the Dollar, Euro, Yen and Pound?
The USDollar has advanced for five consecutive weeks – although the pace hardly resembles the unconstrained bull trend through the first quarter of 2015.
Rates markets are starting to shift in favor of another ECB rate cut by the end of the year, while pricing for a Fed rate hike has jumped forward more than six months over the past two weeks. This all adds up to an environment tilting more bearish for EUR/USD in the short-term.
The British Pound finished the week almost exactly unchanged against the Dollar despite clear disappointments in UK economic data. A busy economic calendar in the days ahead could nonetheless have a lasting impact on trader sentiment, and the stakes are high heading into a critical Bank of England interest rate decision in two weeks’ time.
The diverging paths between the Federal Open Market Committee (FOMC) and the Bank of Japan (BoJ) may encourage market participants to adopt a long-term bullish bias forUSD/JPY, but the fresh batch of central bank rhetoric may heavily impact the near-term outlook should the policy statements show a greater willingness to retain the status quo.
Both the onshore and offshore Yuan rates failed to hold above the key resistance level 6.70, falling below the 6.6800-handle this week.
The Australian Dollar has put in sizeable reversal of the prior bullish trend this week, falling by as much as 234 pips or 3% against the US Dollar from last Friday’s high.
Gold prices are weaker for a second consecutive week with the precious metal off by more than 1% ahead of the New York close on Friday.
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