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Feb 5, 2018

BUSY WEEK FOR FINANCIAL MARKETS AS FOUR CENTRAL BANKS DECIDE ON INTEREST RATES

INTEREST RATE DECISIONS

Global financial markets turn their attention to central bank policymakers this week, as the Reserve Bank of Australia, Reserve Bank of India, Bank of England and the Reserve Bank of New Zealand meet to decide on interest rates. With the global economic recovery well underway across the globe, we may see a shift in language from central bankers as the acknowledge that interest rates are likely to begin rising during 2018.

The eurozone and China are also heavily in focus in the first full trading week of February, as we see a raft of high-impacting macroeconomic data released from the two economies. On Monday we see key January Retail Sales, Investor Confidence and PMI Services data from the eurozone. Whilst the Chinese economy gives us a steady stream of economic data this week, as we get PMI Services, Import, Export, PPI and CPI Inflation numbers for January.

Monday 5th February, EU Retail Sales

The eurozone releases key month-on-month Retail Sales data on Monday, with most analysts expecting the January reading to fall into negative territory. Retail Sales measures the sum of goods and services sold monthly at retail outlets across the eurozone trading block. The report also acts as a measurement of consumption and consumer confidence, with a higher headline reading usually signalling economic growth and rising inflationary pressures.

  • The EURUSD pair remains strongly bullish while trading above the 1.2330 level, further upside towards 1.2640 and 1.2730 seems likely.

  • Should price-action on the EURUSD pair drop below the 1.2330 level, sellers will likely test toward the 1.2280 and 1.2220 support regions.

Tuesday 6th February, AUD RBA Rate Decision

The Reserve Bank of Australia decide on interest rates this week, with most economist expecting the RBA to keep rates on hold at 1.5 percent. The policy statement made by the Reserve Bank Board may express the need for raising rates during 2018, as the global economy accelerates. Generally, the policy statement contains the outcome of bank's interest rate decision and the overall factors that influenced policy makers.

  • The AUDUSD pair may decline further while trading below the 0.8030 level, further downside toward 0.7880 and 0.7815 appears possible.

  • Should price-action on the AUDUSD pair trade back above the 0.8030 level, further upside towards 0.8150 and 0.8220 remains possible.

Wednesday 7th February, NZD RBNZ Rate Decision

The Reserve Bank of New Zealand is expected to keep interest rates unchanged at 1.75 percent, however, the bank's policy statement may create volatility in the New Zealand dollar. We also see the release of the RBNZ quarterly statement, reporting how the monetary policy statement has been implemented since the last statement's issue. The quarterly MPS outlines how the Reserve Bank proposes to achieve its targets, and how it proposes to formulate and implement monetary policy during the next five years.

  • The NZDUSD pair is strongly bullish while trading above the 0.7280 level, further upside towards 0.7350 and 0.7440 seems possible.

  • Should price-action on the NZDUSD pair drop below the 0.7280 level, we may see a deeper correction back toward the 0.7220 and 0.7175 levels.

Thursday 8th February, UK BOE Rate Decision

The Bank of England are expected to keep rates unchanged at 0.50 percent this week, as the United Kingdom's economy remains uncertain after Brexit. The BOE policy statement is likely to mention UK inflation, and the implications facing the nation's imports and exports, after the recent rise of the British pound against the United States dollar and emerging market currencies.

  • The GBPUSD pair remains bullish while trading above the 1.3900 level, further upside towards 1.4280 and 1.4350 seems likely.

  • Should price-action on the GBPUSD pair decline below the 1.3900 level, we may see a deeper correction towards the 1.3680 and 1.3550 support levels.

Friday 9th January, CNY CPI Inflation

The January Chinese Consumer Price Index, released by the National Bureau of Statistics of China, measures the change in the price level of a market basket of consumer goods and services purchased by Chinese households. The Consumer Price Index is a key indicator that measures inflation and changes in purchasing trends, as CPI is one of the most frequently used statistics for identifying periods of inflation or deflation.

 

 

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