EURUSD Forecast Top Risk Between Fed and ECB, Pound and AUDUSD Risk Volatility
There are a few, high-profile and high-potential themes meeting critical events or deadlines over the coming week. With events like the Fed and ECB rate decision as well as time tables for a UK election and US-China trade war escalation, traders should monitor key levels and the economic docket.
Though there are a range of high-level economic releases on tap, the standouts for potential impact and reach are hard to miss. At the top of the traditional list is the FOMC rate decision which represents the last policy evaluation for the US central bank before the year’s end and an overdue change in anticipation for no change after three consecutive meetings that have resulted in 25-basis point rate cuts. The European Central Bank (ECB) is similarly expected to hold its bearings, but the rift within the group over the extreme policy efforts is drawing investor concern.
If you are looking for sheer volatility, the UK general election Thursday evening should be a top concern. While the world is watching this event more for the implications for subsequent Brexit negotiations, the Sterling’s response to mere polls leading up to the event clearly signals this is a candidate for severe volatility. Another open risk is held in the planned escalation of tariffs by the United States on China’s imports on December 15th if there is no Phase One deal signed off. This is set for a Sunday deadline, but don’t underestimate the influence of headlines and sheer anticipation.
Below, are the fundamental and technical forecasts for some of the key global currencies and assets over the coming week.
The US Dollar may rise if the FOMC re-affirms its data-dependent approach and cools 2020 rate cut bets. US retail sales and CPI data may also give the Fed impetus to hold rates.
The latest UK General Election opinion polls continue to show the Conservative Party holding a strong lead over Labour and point to Boris Johnson winning a working majority in Parliament.
The Australian Dollar was focused on its home country in the past week, but that is likely to change sharply in the days ahead with major global risk events coming up.
The Australian Dollar continues to track out broad but active ranges among most of its crosses. This restraint can extend further, but eventually, the most restrictive medium-term activity in 17 years will necessitate a serious break
The price of oil extends the advance from the October low as OPEC and its allies pledge to take additional steps to balance the energy market.
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