Yesterday’s euro’s movement was affected by the USD and the U.S. data. Until, the ECB released some news regarding the possibility of purchasing some corporate bonds in the first quarter of 2015.
These leaks had an immediate affect over the European currency, which sharply dropped below 1.28. This is a critical level, as it will identify whether the Euro will adopt a bullish or a bearish trend. I expect the latter condition to be applied on the EUR/USD.
This downward momentum was halted due to the statements issued by an ECB’s spokesman, saying that the ECB haven’t planned to buy bonds in the near future.
Today, a number of economic data is to be released. Starting with UK, the Monetary Policy Meeting Minutes will be released. They are a detailed record of the Bank of England's policy setting meeting, containing in-depth insights about the economic conditions which affected the decision regarding setting the interest rates.
The breakdown of the MPC members' interest rate votes tends to be the most important part of the minutes.
Moving to the US, the Consumer Price Index (CPI) will be released, measuring the changes in the price of goods and services, excluding food and energy, from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation.
A higher than expected reading should be taken as positive for the USD, while a lower than expected reading should be taken as negative for the USD.
At the same time, the Real Earnings announcement is scheduled for release, measuring wages, salaries and other earnings, corrected for inflation over time; seeking to gauge the actual changes in the purchasing power.
Forecast: 0.3%
Previous: 0.4%
A higher than expected number should be taken as positive for the USD, while a lower than expected number should be taken as negative for the USD.
So, the USD will be affected by these figures and we expect to see some volatility versus other currencies.
There are also some other major releases related to CAD such as the Core Retail Sales index, which measures the change in the total value of the sales at the retail level in Canada, excluding automobiles. It is an important indicator of consumer spending and it is also considered as a pace indicator for the Canadian economy.
A higher than expected reading should be taken as positive for the CAD, while a lower than expected reading should
be taken as negative for the CAD.
The Bank of Canada's Monetary Policy Report is scheduled for release, giving investors some detailed insights of the economic conditions that affected the decision of where to set interest rates. This report is released quarterly.
The interest rate announcement tends to be the most important part of the report for the CAD. Traders watch interest rate changes closely as short term interest rates are the primary factor in currency valuation.
Forecast: 1.00%
Previous: 1.00%
A higher than expected rate is positive for the CAD, while a lower than expected rate is negative for the CAD.
Mr. Stephen Poloz, Bank of Canada’s (BOC) Governor, is expected to speak. Being the head of the BOC's Governing Council, which controls key short term interest rates; he has more influence over the Canadian Dollar's value than any other person. Traders scrutinize his public engagements for clues regarding future monetary policy. His comments may determine a short-term positive or negative trend.
Due to such major news, the Canadian Dollar might be the star of the day.
As for the energies market, The Energy Information Administration's (EIA) Crude Oil Inventories report will be released, measuring the weekly change in the number of barrels of commercial crude oil held by the US firms. The level of inventories affects the price of petroleum products, which can affect the inflation.
Forecast: 2.686M
Previous: 8.923M
Gasoline Inventories report measures the change in the number of barrels of commercial gasoline held in inventory by commercial firms during the reported week. The data included in this report influence the price of gasoline products which affects inflation.
This data is not consistently effective, as there are both inflation and growth implications.
Forecast: -1.000M
Previous: -3.995M
Moving to Australia, the Reserve Bank of Australia’s (RBA) Governor Glenn Stevens is expected to speak at a late timing. Being the head of the RBA, which sets short term interest rates, he has a major influence over the value of the Australian dollar.
Traders watch his speeches closely, as it often drops subtle hints regarding future monetary policy and interest rate shifts.
His comments may determine a short term positive or negative trend.
From New Zealand, the Consumer Price Index (CPI) to be released, measures the change in the price of goods and services from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation.
Forecast: 0.5%
Previous: 0.3%
A higher than expected reading should be taken as positive for the NZD, while a lower than expected reading should be taken as negative for the NZD.
We wish you all the luck in your trading activities. For any further assistance, please do not hesitate to contact us at analysis@ICMCapital.co.uk at the Research & Analysis Department.
FOREX trading is not suitable for everyone, as it contains a high risk of losing your entire investment. This article shall not be handled as a recommendation as it’s to assist our readers in better understanding the market movements.