Overview of Major market moving events for 44th week of 2015

Author Anil Panchal Category Fundamental Analysis 27 Oct 2015 Updated at 08:37 CET
Dovish comments from the ECB President, followed by surprise rate cut from the Chinese central bank rejuvenated the US Dollar Index (I.USDX) strength towards testing the highest level in more than 2 months during last week; the same also helped the greenback gauge in registering the first weekly gain in previous four weeks. The Euro plunged heavily against majority of its counterparts as the regional central bank President favored the need of additional monetary easing and said the December economic review will play a crucial role in announcing details of further monetary measures, mainly the QE extension. Further, the JPY remained mainly lackluster due to speculations that the Bank of Japan, during its monetary policy meeting this week, may hint for extra loose monetary policy while the GBP remained strong with upbeat Retail Sales figures and the commodity currencies, namely, AUD, NZD and CAD, pulled themselves back from recent up-move with Chinese rate action.

Following dismal US housing numbers on Monday, which pulled the USD back from its recent rise, the current week has many important economic events/releases scheduled that may continue fueling the Forex moves. Amongst them, monetary policy meetings by the FOMC, BoJ and the RBNZ, GDP releases from UK, US and Canada and CPI releases from EU, Australia and Germany, are likely to take the center stage of the market readings. Moreover, US CB Consumer Confidence, Durable Goods Orders and Chicago PMI are some additional details that would make Forex traders busy throughout the week. Let’s examine them in detail.
 
 
US GDP To Direct The USD Moves

Even if the monetary policy meeting of the Federal Reserve is scheduled to conclude on Wednesday, the Advance reading of Q3 2015 US GDP, to be announced on Thursday, becomes more important to direct the USD moves as speculations have almost faded that the FOMC could signal rate hike in October meeting.

Final reading of Q2 2015 GDP marked the impressive 3.9% growth number and could continue favoring hawkish FOMC members that expect a rate hike in 2015; however, consensus relating to the Advance reading signals a slower growth, to 1.6%, and may help easing a bit of USD strength. However, the same slowdown in growth was previously forecasted and is less likely to provide noticeable greenback declines unless it plunges below the 0.6% mark, lowest in more than a year. Further, the FOMC members may have less chances to fuel the Forex volatility as the meeting isn’t followed by the Fed Chair’s press conference; though, a bit of hint towards the rate hike in December could provide considerable strength to the US Dollar.

Apart from the headline GDP and FOMC details, monthly readings of Durable Goods Orders and CB Consumer Confidence, scheduled for Tuesday, Thursday’s Pending Home Sales and the Chicago PMI, scheduled to be released on Friday, are some other details that could help determine near-term USD moves.

After Monday’s weaker New Home Sales, the Pending Home Sales are expected to erase prior declines of -1.4% with a +1.1% gain and can help giving a bit up-move to the USD while Durable Goods Orders may continue its decline, this time with a negative -1.1% versus the downwardly revised prior of -2.3%; however, Core reading is expected to be at 0.0% versus -0.2% previous mark and can help soothing the scars to greenback. Moreover, official Consumer Confidence can maintain its level near 103.00 highs with 102.5 consensus and Chicago PMI can rise to 50.00 expansion level with 49.5 mark being forecast and 48.7 printed as previous reading.
 
 

EU CPI And UK GDP May Help Forecast EUR and GBP Trend Respectively

Irrespective of the recent comments from the ECB President, which favored more monetary easing and weaker EUR, the central bank head left doors open for future hawkish stance as he said the decision would depend upon the December review and the Preliminary reading of German and EU CPI, scheduled for Thursday and Friday respectively, can provide meaningful information to determine EUR trend. Although, expectations concerning German CPI keep favoring slowdown in the largest EU economy, with -0.1% mark against -0.2% prior, the EU CPI is expected to remove its prior declines of -0.1% with 0.0% mark and can help provide a bit of EUR pullback.

Moving ahead, the BoE policy makers have also being dovish off-late and hence Tuesday’s Preliminary reading of Q3 2015 UK GDP becomes an important indicator to gauge Britain’s strength. Even if the consensus indicate a slower growth rate, to 0.6% from 0.7% prior, a higher reading could fuel the recent GBP up-move and can enable the BoE policymakers to favor tight monetary policy and higher interest rate in future.

BoJ and the Rest of the Globe Economics

Although, safe-haven status and a lack of support to further monetary easing from the Bank of Japan (BoJ) kept helping the JPY in recent days, the same is less likely to continue going forward as the monetary policy meeting by the BoJ, on Friday, will be decisive for the JPY traders. Recently disappointing economic details, coupled with dovish comments from some of the BoJ members, signal that the central bank will revise down its inflation and growth outlook, in its bi-annual BoJ outlook report, and may hint for the need of further monetary easing. Given the BoJ matches market expectations and downgrades economic forecasts and/or favor further monetary easing, chances of JPY witnessing a sharp decline can’t be avoided. Though, the central bank is less expected to hint any monetary easing and can negate the damages done to JPY, via economic forecasts, after a bit of profit booking trades.
 
 

In addition to the details from US, UK, EU and Japan, details from economies depending upon commodities, mainly Australia, Canada and New-Zealand, are likely to become important during this week. Mainly, Tuesday’s New-Zealand Trade Balance and monetary policy meeting by the Reserve Bank of New-Zealand (RBNZ), scheduled for Wednesday, becomes important to forecast NZD moves while AUD traders should watch for Australian CPI and PPI, to be released on Wednesday and Friday respectively. Moreover, Friday’s Canadian GDP, together with the Crude momentum are likely cues that the CAD traders should pick.

The RBNZ is expected to stand pat on its current monetary policy; however, dovish comments in a rate statement, considering weaker dairy prices, could magnify the NZD downside while higher Trade Deficit, than the -822M expected and -1035M prior, many trigger NZD decline. Further, Australian CPI and PPI are may miss the expectations favoring no change in the prior 0.7% CPI and 0.3% PPI and can extend AUD south-move. Moreover, the Canadian GDP is expected to print another weaker reading, to 0.1% versus 0.3% prior, and can open room for additional declines by the Canadian Dollar (CAD).

Considering the importance of the events lined up for publish during the week, chances are higher that the upcoming days would be volatile enough to take advantage in forex trading. However, headline readings/events, like FOMC, BoJ and GDP details, should be traded cautiously as unexpected outcomes may harm the respective currencies.
 
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