GDP from Japan, an important German survey and the Philly Manufacturing Index are among the highlights of this week. Here’s an outlook for the major market-moving events this week.
The echoes from the ground-breaking Fed decision still rock the markets. Fear has returned, big time. Risk aversion dominates trading, with the dollar storming the board. Will this continue or will we see signs of optimism? Let’s start:
- Japanese GDP: Published on Sunday at 23:50 GMT. After reaching a 15 year high against the US, we’ll see if there was a justification for a stronger yen. The last quarter of 2009 and the first quarter of 2010 were great – growth rates of 1% and 1.2%. But now, a growth rate of only 0.6% is predicted. This will supply am exciting start for the week.
- US TIC Long-Term Purchases: Published on Monday at 13:00 GMT. This figure shows foreign flow of cash into the US, and serves as a gauge of confidence. After peaking at 140 billion in March, this figure eased to about 35 billion last month, and is expected to be similar now.
- British inflation data: Published on Tuesday at 8:30 GMT. Inflation is a sensitive issue in Britain. Mervyn King, the head of the BoE, returned to dismissing inflation in an report last week. British CPI currently stands at an annual rate of 3.2%, above the target. A return to the target, under 3%, will damage the Pound, while a rise will renew talks of a rate hike. 3.1% is predicted.
- German ZEW Economic Sentiment: Published on Tuesday at 9:00 GMT. This all-important gauge has been on the fall in the past 3 months, dipping rapidly from 53 to 21.2 points. German investors and analysts fear the situation following the turmoil that surrounded the European debt crisis. It will be interesting to see if they become more optimistic on German numbers or less, after the Fed statement. This indicator tends to hurt the Euro.
- US Housing data: Published on Tuesday at 12:30 GMT. With home sellers reducing prices of existing homes, the situation of the housing sector is deteriorating again. Both Building permits, which stand at 580K, and Housing Starts, that stand on 550K, are important indicators for this sector. Stagnation is expected in both numbers.
- US PPI: Published on Tuesday at 12:30 GMT. Producer prices dropped by 0.5% – a serious drop that provides further evidence of a slowdown. Core CPI rose by an insignificant 0.1%. Both numbers are expected to remain almost unchanged. A significant rise will ignite some optimism.
- US Unemployment Claims: Published on Thursday at 12:30 GMT. After topping 480K last week and reaching 484K, the highest in 5 months, and after the bad Non-Farm Payrolls, there is some hope for correction. Only a drop under 430K will be a good sign. A rise above 500K will be very bad.
- US Philly Fed Manufacturing Index: Published on Thursday at 14:00 GMT. This important manufacturing gauge rose steadily at the beginning of the year, but then deteriorated quickly from 21.4 to 5.1 points. A correction is expected now – to 7.2 points, showing that manufacturing is still growing. A drop to a negative number will be alarming, as it means contraction.
That’s it for the major events this week. Stay tuned for the coverages on specific currencies. Further reading:
- For EUR/USD, check out the Euro/Dollar Forecast.
- For GBP/USD (cable), look into the British Pound forecast.
- For the Australian dollar (Aussie), check out the AUD/USD forecast.
- For the New Zealand dollar (kiwi), read the NZD/USD forecast.
- For USD/CAD (loonie), check out the Canadian dollar forecast.
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