The week opened with dollar strength on a rather light calendar. Today is already very bust: major releases in Europe are followed by the rate decision in the US: will Bernanke send new signals? Here’s the daily outlook.
The strong volatility seen on Monday’s trading was also influenced by the different time difference between Europe and North America. This will accompany us for two more weeks.
Australia’s Monetary Policy Meeting Minutes are released at the beginning of the day. We’ll see how the members see the next decisions: more rate hikes? A pause?
On the other side of the day, the MI Leading Index will give an overview of the Australian’s economy. For more on the Aussie, read the AUD/USD forecast.
In Switzerland, the SECO Economic Forecasts might shake the currency after it strengthened significantly yesterday. An intervention by the central bank can happen anytime.
In Germany, the ZEW Economic Sentiment is expected to drop once again, from 45.1 to 43.5, continuing the trend in the past months. Also the all-European sentiment is released at the same time, but it’s considered less accurate than the German one.
At the same time, we’ll get a look at Europe’s inflation: CPI is expected to confirm the initial read of a year-over-year rise of 0.9%. Core CPI will probably be confirmed at 0.8%.
For more on the Euro, read the EUR/USD forecast, and Casey Stubbs’ latest analysis.
In Britain, CB Leading Index will probably edge up, following last month’s small rise. Later in Britain, MPC member Charles Bean will make a public appearance, the first out of a long list of speakers this week.
Read more on the Pound at the GBP/USD forecast.
In Canada, the quarterly Labor Productivity is expected to rise by 0.7% after a drop of 0.3% last quarter. Remember that a lower number is better for the currency.
Also in Canada, Manufacturing Sales are predicted to rise by 0.7%, less than last month’s 1.6% rise. For more on the loonie, struggling around 1.02, read the USD/CAD forecast.
In the US, Building Permits are expected tick down from 620K to 610K. Also in the same sector, Housing Starts are predicted to edge down as well – from 590K to 570K.
Import Prices are expected to drop by 0.1%, after jumping by 1.4% last month. Just before Ben Bernanke takes the stage, Treasury Secretary Timothy Geithner will speak as well – about the budget. This may move currencies as well.
At 18:15 GMT, an hour earlier than usual for Europeans, a new Federal Funds rate will be announced in the US. It isn’t expected to move from the rock bottom figure of 0.25%. As usual, every word of the FOMC Statement will be closely analyzed and will shake the markets before and after the release, possibly for many hours.
Ben Bernanke made a small move by raising the discount rate. Another member wants to remove the words “extended period of time” concerning the regular rate. Will we see a different statement this time?
Just before the end of the day, Japan’s Tertiary Industry Activity is due. It’s expected to rise by 1.3%, hours before the Japanese rate decision in the following day.
That’s it. Happy forex trading!
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