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After a holiday in the US, the market return to full gear with a busy day. We have American TIC Long-Term Purchases, a rate decision in Canada, and major events in Britain and Europe. Let’s see what’s up for this long day.

Prices in Britain have been picking up, and this could strengthen the Pound bulls. CPI has risen to an annual rate of 1.9% last month, and is predicted to jump even higher to 2.6%, still with the government’s target. Core CPI is also expected to edge up to 2.3% and the RPI (Retail Price Index) is expected to reach a level of 2.3% after many negative months.

If the government’s target of 1-3% inflation isn’t met, BoE governor Mervyn King is due to send an open letter to the government, explaining the reasons for this and laying out the measures that are expected to be taken. In case of CPI above 3% he might warn of a rate hike.

Even if the CPI doesn’t pass 3%, Mervyn King will make a public appearance later in the day at Exeter. He might shake GBP/USD. For more, read the British Pound forecast.

In Europe, there’s an important release as well: the German ZEW Economic Sentiment is expected to drop once again, this time to 49.9 points. Also the all-European number is predicted to drop. This important indicator hurt the Euro last month. For more on the Euro, read Casey Stubbs’ weekly update and my EUR/USD forecast.

Moving across the Atlantic, Canada’s Leading Index is expected to shine rise by 1.1%, following the positive trend in recent months. That will be a warm up for the big event.

The Bank of Canada is expected to leave the interest rate unchanged at 0.25%. The big question is about the future: Will Mark Carney hint about an upcoming rate hike? The wording of the BOC Rate Statement is important. Note that if the schedule is earlier than the end of second quarter, the loonie will gain.

For more on USD/CAD, read the Canadian dollar forecast.

In the US, TIC Long-Term Purchases are expected to rise, helping the dollar. This figure, which represents cash flow of foreigners into the US, is expected to rise by almost 50% to 30.3 billion, showing confidence in the US economy. This release will affect all the currencies.

Near the end of the day, we have a CPI release from New Zealand. After a quarterly rise of 1.3%, prices are expected to be flat this time.

In Japan, the Tertiary Industry Activity is predicted to drop by 0.1% after rising last month. This might weaken the Yen – something the government wants.

In Australia, Westpac Consumer Sentiment will give a general glimpse at the economy. This week’s main Aussie mover comes from Chinese figures rather than Australian ones.

For more on the Australian dollar, read the AUD/USD forecast.

That’s it for today. Happy forex trading!

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