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Jul 23, 2018

MARKETS AWAIT EUROPEAN CENTRAL BANK POLICY DECISION

ECB IN FOCUS

During the upcoming trading week, the European Central Bank take center stage, as the Governing Council decide on interest rates and communicate forward policy guidance to investors. The main focus of Thursday’s meeting is likely to be ECB President Mario Draghi’s press conference, with financial market participants awaiting President Draghi’s latest thoughts on the eurozone economy and future rate increases.

This week we also see the release of important Gross Domestic Product, Inflation and Manufacturing data from the United States economy. EU Manufacturing and Services data is also heavily in focus this week, as the trading block releases preliminary PMI data for the month of July, while the German economy reveals the outcome of the latest IFO survey.

Monday 23rd July, USD Existing Home Sales

Existing home sales measure the number of recorded sales of pre-owned homes inside the United States economy. Due to the sensitivity of the housing market to business in the United States, the report remains a valuable indicator of the overall condition of the economy. Pre-owned home sales are not taken into account when measuring US GDP, they do, however, affect the overall state of the US economy.

  • The USDJPY pair is bearish while trading below the 111.39 level, key support is found at the 110.80 and 109.65 levels.
  • If the USDJPY pair moves above the 111.39 level, buyers will likely test towards the 112.20 and 113.00 resistance levels.

Tuesday 24th July, EUR Eurozone Manufacturing PMI

The Manufacturing Purchasing Managers Index, released by the Markit economics, measures the activity level of purchasing managers in the manufacturing sector. The manufacturing PMI is an important indicator of business conditions and the overall economic condition in the eurozone because the manufacturing sector represents nearly a quarter of total GDP. A reading above fifty indicates economic expansion in the sector while a figure below fifty indicates economic contraction.

  • The EURUSD pair is bullish while trading above the 1.1681 level, key resistance is found at the 1.1757 and 1.1851 levels.
  • If the EURUSD pair trades below the 1.1681 level, sellers may test towards the 1.1600 and 1.1570 levels.

Wednesday 25th July, AUD Australian CPI

The Australian Consumer Price Index is reported by the Australian Bureau of Statistics and measures the change in the price of goods and services purchased by consumers. Australian CPI data is calculated on a quarterly basis and remains a key indicator to measure inflation and changes in purchasing trends. The Reserve Bank of Australia considers the Consumer Price Index one of the most important economic indicators when deciding where to set interest rates.

  • The AUDUSD pair is bullish while trading above the 0.7410 level, further upside towards 0.7460 and 0.7555 seems likely.
  • If the AUDUSD pair moves below the 0.7410 level, sellers are likely to test towards the 0.7330 and 0.7280 support levels.

Thursday 26th July, EUR ECB Press Conference

After the actual rate ECB decision is announced, the European Central Bank usually holds a forty-five-minute press conference, with ECB President Draghi answering questions. The main points of the conference are inflation and an entire economic overview and examination of the causes of the ECB's interest rate decision. During the conference, ECB President Draghi usually gives important clues related to the future monetary policy.

  • The EURGBP pair is bullish while trading above the 0.8900 level, further upside towards the 0.8960 and 0.9088 resistance levels seems possible.
  • If the EURGBP pair moves below the 0.8800 level, sellers are likely to test towards the 0.8760 and 0.8650 support levels.

Friday 27th July, USD US GDP Annualized

United States Gross Domestic Product Annualized is released by the US Bureau of Economic Analysis and shows the monetary value of all the goods, services and structures produced within a given period of time. US GDP Annualized is a gross measure of market activity, as it indicates the pace at which the American economy is growing or decreasing.

  • The USDCHF pair is bearish while trading below the 0.9980 level, further losses towards 0.9890 and 0.9778 levels remains possible.
  • If the USDCHF pair trades above the 0.9980 level, buyers are likely to test the 1.0055 and 1.0100 resistance levels.
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