The first week of February, unarguably, had the most populous economic calendar with major central bankers, including US Federal Reserve, Bank of England and Bank of Japan, scheduled to discuss their policy moves. Moreover, UK top-tier PMIs & US employment report were on the top of data-points' list that traders were observing. Though, nothing good happened for the US Dollar as Mr. Trump kept giving priority to his protectionist policies and refrained from taking any actions that could help corporations abroad. On the top of that, Friday's Job details also hurt the greenback as Wages and Unemployment rate flashed weak signals, which in-turn pared speculations of Fed's gradual rate-hikes by dragging the US Dollar Index (I.USDX) down for sixth consecutive week. On the contrary, the EUR remained benefited from upbeat CPI & GDP numbers whereas AUD, NZD and CAD enjoyed rise in commodity prices. Further, GBP and JPY dipped for the week after BoJ again increased its Japanese Government Bond (JGB) buying and the BoE Governor didn't discuss any strong clues for the UK economy, except inflating GDP and inflation forecasts in Quarterly Inflation Report (QIR). At last, Gold prices remained firm with strong safe-haven backup and the Crude managed to post a bit good weekly closing as US levied fresh sanctions on Iran due to its missile test and OPEC members followed their previously agreed production-cuts.
Moving towards the upcoming week, having comparatively less data-flow to watch, trading decisions might become difficult as some of the influential central bankers, namely ECB President and RBA & RBNZ Governors, could chose to trigger noticeable moves of respective currencies. Moreover, Trade Balance details from US, UK & Canada, coupled with US Consumer Sentiment and UK Manufacturing & Industrial Production, are some additional information that global market players would be interested in observing. Let us discuss how these important events could affect Forex moves.
Thin Economic-Line Adds Importance Of Trump Talk
Following a heavily packed economic-tray, the US offers only few data-points to observe this week. Amongst them, Tuesday's Trade Balance, Thursday's Jobless Claims and Preliminary UoM Consumer Sentiment, up for Friday, gains more weight. Forecasts aren't suggesting any green signals for the greenback as Jobless Claims is likely to inch up from its 246K prior to 249K and the Consumer Sentiment Index is also expected to portray a bit weaker print of 97.9 against its upwardly revised 98.5 previous. However, Tuesday might start the week with a bit stronger USD with weaker Trade Deficit of -45.0B from -45.2B and with an increase in JOLTS Job Openings to 5.56M versus 5.52M earlier. At the political front, Japanese PM is scheduled to meet his US counterpart around weekend and might discuss trade-ties. From the initial days of trump presidency it seems that US President is less likely to offer any incentive to Japanese PM to stretch their trade ties and might trigger another round of protectionism.
As US economic calendar has very few data-points scheduled for publish, actions by Trump administration would gain higher importance in directing near-term USD moves.
If US President choose to repeat his protectionist measures in front of Japanese PM and scheduled data-points also portray weakness of the world's largest economy, chances of the EURUSD to meet 1.0950-60 region can't be denied. Though, technicals are against the up-move as 100-day SMA, at 1.0800, continues limiting the pair's advances.
Central Bankers To Watch
In addition to US data-points, some of the central bankers are also scheduled to provide noticeable Forex moves during the present week. The first being ECB President Mario Draghi who is scheduled to present his testimony in front of European Parliament on Monday itself. After Mr. Draghi, monetary policy meetings of RBA & RBNZ, on Tuesday and Wednesday respectively, are additional actions by central bankers that deserve attention.
While latest improvements in EU economics might help ECB President to stay firm in front of EU policymakers, broader pessimism due to Trump policies and upcoming election threat from some of the EU nations can force him not to be too hawkish.
As RBA Governor has repeatedly conveyed the central bank's intention of not altering present monetary policy, market focus is majorly grabbed by the RBNZ wherein the central bank is still facing tough time when it comes to headline economic figures even after cutting its benchmark during previous meeting. Further, latest trade and inflation figures from Australia might help the RBA to utter some positive statements whereas RBNZ can only avoid any instant actions but might choose to remain a bit cautious.
Hence, ECB President's testimony and RBA meeting can help the EUR & AUD to extend their respective advances whereas RBNZ can fuel further NZD upside only if it surprises traders with latest up-moves in commodity prices. Technically, 0.7730 becomes an important resistance for AUDUSD whereas NZDUSD traders should watch 0.7370 level with 0.7580 & 0.7220 being respective supports to observe.
Friday Becomes Important For GBP Traders
Alike rest of the major economies, the UK will also have less data-points to help forecast GBP moves, except Friday when monthly releases of Manufacturing & Industrial Production, coupled with Trade Balance, are scheduled for publish. Market consensus is indicating further downside by the GBP as Manufacturing & Industrial Production are both likely to flash soft figures of +0.3% & -0.2% against their +1.3% & +2.1% respective priors. Though, Trade Balance might help the GBP with -11.5B figure versus -12.2B earlier. Considering the latest dip in UK economics, as portrayed by weaker GBPUSD, disappointments from production figures can drag the Cable towards 1.2220 but surprisingly upbeat number might help the pair to challenge the crucial 1.2800 mark.
Last But Not The Least: Chinese & Canadian Figures
Monthly releases of Canadian Jobs report and Trade Balance, coupled with Ivey PMI, are also in the list to entertain CAD traders. Forecasts suggest a bit positive Trade Surplus of 1.2B against 0.5B prior and a weaker Ivey PMI of 58.3 versus 60.8 earlier to provide mixed clues to Loonie players on Tuesday while a dip in Employment Change, with -5K against +53.7K prior, might weaken the Canadian Dollar on Friday. With the recent upswing in Crude prices, a surprise strength in trade and employment figures can drag the USDCAD to 1.2860-50 region but the pair's inability to break 1.3000 mark, coupled with pessimistic Canadian economics, can become reason for the Quote to revisit 1.3200 resistance.
Chinese Trade Balance, scheduled for Friday, is the last detail to discuss. The trade number might follow recent flow of Chinese data-points, which has been good for commodity traders, with 295B of surplus against 275B prior.Given the world's largest industrial player manage to post another good figures of its economic situation, chances of additional upside by the AUD, NZD and CAD, coupled advances in commodity prices, can't be denied.
Cheers and Safe Trading,
Anil Panchal