Overview of Major Market Moving Events For 8th Week of 2016

Author Anil Panchal Category Fundamental Analysis 23 Feb 2016 Updated at 11:39 CET
Even as the FOMC meeting minutes again failed to provide clear guidelines on Fed’s next move, upbeat inflation report from US caused market players to rethink on the Federal Reserve’s capacity to obey their four rate-hikes a year plan. US Core CPI rallied to 2.2% on a yearly basis, the highest in more than four years, and propelled the US Dollar Index (I.USDX) towards printing first positive weekly closing in previous three. Other than the US Inflation, talks relating to Britain’s departure from Euro-area, popularly known as ‘Brexit’, also gained market attention as the UK Prime Minister announced referendum to vote in June and the EU authorities also passed aid packages to help the Britain maintain Euro-area status. These talks in-turn fetched the EUR and GBP down against majority of its counterparts. Furthermore, global market uncertainty kept favoring the JPY’s northward trajectory while improvement in commodity prices, headed by Crude which mainly gained due to dip in US rig counts, helped commodity currencies, namely, AUD, CAD and NZD, to maintain their recent advances.

While US inflation numbers and Brexit talk fueled market volatility during last week, second estimates of US and UK GDP for Q4 2015, US CB Consumer Confidence details and the Durable Goods Orders, together with CPI releases from EU and Germany, are some of the data-points that could maintain the flow of liquidity into the world’s largest financial market, Forex, while going forward.
 

US GDP To Gain Major Attention

Following the improvement in US inflation, this week’s Preliminary US GDP for Q4 2015, scheduled for Friday, becomes an important signal for market players which can clarify whether the US economy is strong enough to sustain another rate-hike or not. The US economic activity has been growing slowly during last two quarters of the 2015 while the first estimation of Q4 2015 GDP growth marked 0.7% figure against the 0.8% forecast & 2.0% prior. Friday’s release is expected to provide another shock to the USD bulls as it is likely to print a 0.4% growth against 0.7% Advance estimate.

Other than the US GDP, monthly releases of CB Consumer Confidence, Durable Goods Orders and housing market details, namely Existing and New Home Sales, are additional signals from the US that could help determine near-term USD moves. CB Consumer Confidence and Durable Goods Orders, up for publish on Tuesday and Thursday respectively, are showing mixed signals as the consumer sentiment gauge is likely printing 97.4 number against 98.1 prior while the durable goods orders may reverse its previous contraction of -5.0% with +3.0% growth and the Core reading might also reimburse its earlier loss of -1.0% with +0.2% mark. Moreover, forecast for both the housing market details indicate downbeat figures as Existing Home Sales, scheduled for release on Tuesday, is expected to print 5.37M against 5.46M prior and the New Home Sales, up for release on Wednesday, signals to mark 522K against 544K number released during previous month.
 

European Details To Watch

On Monday, Flash readings of Manufacturing and Services PMIs from EU, Germany and France marked weaker numbers and forced traders’ fraternity to look for the Thursday’s EU Final CPI and Friday’s German Preliminary CPI to predict near-term trend of the regional currency. While EU CPI is likely confirming its 0.4% Flash reading, the German inflation mark might reverse its -0.8% print with +0.6% figure and can give reason to the ECB to avoid further monetary easing.

GBP Traders To Observe UK GDP And ‘Brexit’ Talks

GBP traders have got another reason to worry as talks concerning the Britain departing from Euro-area gained momentum and the UK PM has given a June referendum to vote on the issue, which in-turn damaged the currencies, of Euro-area and the UK. Even as majority of the UK leaders are showing to public that they would not favor ‘Brexit’ and the EU authorities are also trying hard to maintain the Britain in the region, some of the influential British favor the move-out from the struggling regional economy. On the economic front, Second estimation of UK GDP, scheduled for Thursday release, is likely to remain stagnant with 0.5% growth rate.

New-Zealand And Japanese Data-Points

In addition to top-tier details from US, UK and EU, monthly Trade Balance numbers from New-Zealand and Japanese Inflation figures, out for Friday, are the rest of economics to track for the global forex traders. Looking at the consensus, New-Zealand Trade Balance depict increase deficit of -250M against -53M prior and the Tokyo Core CPI is expected to reverse its previous -0.1% decline with +0.0% mark. Also, the Japanese National Core CPI could print -0.2% mark against +0.1% prior.
 
To sum up, headline GDP figures from US and UK could take the center-stage in signaling the near-term market trend while developments on the talks concerning the Britain’s exit from EU, coupled with the EU inflation figure, might become helpful in forecasting EUR and GBP moves. Should there be a welcome print by the US GDP, chances of the USD up-move continuation can’t be denied. Moreover, improvement in Japanese Inflation numbers can provide additional reason for the JPY to maintain its northward trajectory.


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