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Apr 30, 2018

US DOLLAR BULLS AWAIT KEY FEDERAL RESERVE INTEREST RATE DECISION

FOMC DECIDES

The United States economy takes centre stage this week, as the U.S Federal Open Market Committee come together to decide on where to set the U.S interest rate. According to consensus forecast amongst economists, the FOMC are likely to keep rates on-hold at 1.75 percent, although it remains a close call. The U.S economy also releases the ISM Manufacturing report this week and the Non-farm Payrolls Job report, for the month of April.

Aside from U.S data, we also see the Australian economy heavily in focus, as the Reserve Bank of Australia meet to decide on interest rates. The Australian economy also releases market moving Employment and Unemployment data. After a recent softening of data, we see the German economy release key Retail Sales, Manufacturing and CPI Inflation data for the month of April.

Monday 30th April, U.S Core PCE Price Index

The U.S Core PCE report is greatly valued by the Federal Reserve, mainly due to its capability of forecasting inflationary pressures in the U.S economy. An overall increase of prices may be derived from an excess take in of these high levels of production and consumption. The Fed utilizes a measure of inflation, resulting from the PCE as their primary gauge of inflation. Persistently low Personal Spending however, may lead to decreasing output levels and an economic downturn in the American economy.

  • The EURUSD pair is bearish while trading below the 1.2154 level, further losses towards the 1.2060 and 1.2000 levels remains possible.

  • If the EURUSD pair moves above the 1.2154 level, buyers may test towards the 1.2200 and 1.2248 levels.

Tuesday, May 1st, Australian RBA Interest Rate Decision

The RBA Interest Rate Decision is announced by the Reserve Bank of Australia, and it is usually followed by the RBA Rate Statement. If RBA policymakers are hawkish about the inflationary outlook of the economy and raise the official Australian interest rate, it is seen as positive for the Australian dollar. If the RBA strikes a dovish view towards the Australian economy or cuts the nations interest rate, it is seen as negative for the Australian dollar.

  • The AUDUSD pair is strongly bearish while trading below the 0.7655 level, further losses towards the 0.7530 and 0.7460 levels may occur.

  • If the AUDUSD pair trades above the 0.7655 level, buyers may test towards the 0.7715 and 0.7755 levels.

Wednesday 2nd May, U.S FOMC Interest Rate Decision

The Federal Open Market Committee members meet eight times per year, to decide on U.S monetary policy, and decide where to set the U.S interest rate. Rate changes impact interest rates for U.S consumer loans, bonds, mortgages and the U.S dollar's exchange rate. The Monetary Policy Statement, delivered by the FOMC, is very also important, and can actually be more important than the actual interest rate decision, as financial markets are always forward looking.

  • The USDJPY pair is bullish while trading above the 109.00 level, further upside towards the 110.10 and 100.80 levels seems possible.

  • If the USDJPY pair declines below the 109.00 level, sellers are likely to test the 108.60 and 107.85 support regions.

Thursday 3rd May, Eurozone CPI Inflation

The Consumer Price Index, released by Eurostat, measures the changes in the price of goods and services from the perspective of the consumer. A higher value of the CPI represents significant inflationary pressures in the Euro Zone economies. Higher inflation puts pressure on the European Central Bank to raise interest rates. CPI data may not always affect the euro currency significantly, because CPI is the European Central Bank's mandated inflation target.

  • The EURGBP pair is bullish while trading above the 0.8780 level, further upside towards 0.8835and 0.8890 level seems possible.

  • If the EURGBP pair declines below the 0.8780 level, sellers may test towards the 0.8700 and 0.8660 levels.

Friday 4th May, U.S Non-Farm Payrolls Jobs Report

The U.S Non-farm payrolls Job report is the most carefully observed indicator in the United States overall employment situation. It is considered the most inclusive calculation of job creation in the U.S, and this characteristic causes the NFP figure to become highly significant, due to the great importance of labour in the United States economy. Most economists agree that the U.S economy will have created 198,000 new jobs during the month of April.

  • The USDCHF pair is strongly bullish while trading above the 0.9800 level, further upside towards 0.9980 and 1.0048 appears possible.

  • If the USDCHF pair declines below the 0.9800 level, sellers are likely to test the 0.9740 and 0.9680 support regions.

 

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