We are embarking on another busy Forex week. Let us have a look at the major events in the week ahead and recap some highlights from last week.
Rate decision by ECB
After reducing the volume of bond buys from 80 to 60 billion euros in monthly purchases starting April until the end of 2017. The big question is what comes next. Given recent developments in the economy and inflation expectations, the ECB could provide an improved prognosis, setting the foundation for advertising to drop QE in September.
Keep in mind that this is an important meeting of the ECB, where new growth and inflation forecasts have also been published. In many past events, Draghi broke the euro. Will this be different this time? According to reports, the ECB is ready to ignore the latest fall in inflation and improve its estimates.
UK elections
Britain goes to elections less than two years after the referendum after the PM Theresa May called for early elections. At first, it seemed that her conservative party was set for a convincing victory. The party has lost ground to the opposition Labor Party. The small majority for May will be disappointing as the parliament hangs (as suggested in the polls) will deeply affect the
Australian rate decision
The Reserve Bank of Australia last changed interest rates in August 2016 but has reverted to a neutral stance since then. The cash rate of the AUD is expected to remain unchanged at 1.5% for at least another month with the AUD moving on the tone of this statement. The Australian economy is currently doing great with a concrete job growth and consumption rate. There is still anxiety and worry about China as the RBA has taken advantage of downfalls in the exchange rate in the past and pushed the currency even lower. The question now remains if they will hit the AUD again.
Canadian jobs report
This event will no doubt take center stage alongside UK elections. In April, the Canadian economy gained only 3.2K jobs and the unemployment rate remained at 6.5%. A increase of 11.5K jobs is on the cards and the unemployment rate is forecast to advance to 6.6%.
The Majors
USD:
Over in the US, the CB Consumer Confidence report reduced and slightly missed the estimate. Nonfarm Payrolls turned out to be a big disappointment as it was below expectation with only 138,000 gained.
EUR/USD:
The USD tried to retaliate against the euro is still trading near the 2017 high. This week will highlight the ECB decision. Will Draghi upgrade the assessment? ECB President Mario Draghi didn’t give away much keep when he expressed optimism about growth but still worries about inflation. Inflation indeed was hitting, with core CPI dropping from its highest levels since 2013 at 1.2% to 0.9%. That was primed by reports from Germany, France, and Spain.
GBP/USD:
This week’s key events include Services PMI, the parliamentary election and Manufacturing Production. At ForexSignal.com we bought the GBPUSD early this morning at 1.2906 and so far for the day it has hit a high of 1.2940. The trade is still open at the time of this article being written.
AUD/USD:
AUD/USD was unchanged last week, closing at 0.7439. This week’s key events are Private Capital Expenditures and Retail Sales. Australian Retail Sales recorded a strong gain of 1.0%, easily beating the estimate.
This weak reading allowed the Aussie to recover and hold its own against the US dollar last week. The event of this week will also determine if the AUD will hold further against the greenback for a while longer.
USD/CHF
Last week we enjoyed Target 3 success with our Forex Signal to sell USDCHF at 0.9689. View details of the trade – click here.
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