TRADERS AWAIT KEY INFLATION DATA AND INTEREST RATE DECISIONS
INFLATION AND RATES
During the upcoming trading week inflation data and interest rate decision are heavily in focus as we see the release of key inflation data from the eurozone, United Kingdom, Canadian and United States economies. We also see important interest rate decisions from the US Federal Reserve, Bank of England and the Bank of Japan. The FOMC rate decision and monetary policy statement are likely to be the key drivers in the foreign exchange markets this week, with market participants looking for forward guidance on the US economy and the pace of rate increases in 2019.
Aside from inflation and interest rates, the economic calendar remains busy with the release of the Reserve Bank of Australia Meeting Minutes, Q3 New Zealand GDP data and a raft of high-impact macroeconomic data from the United Kingdom and United States economies.
Monday 17th December, EUR Eurozone CPI
The eurozone 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 eurozone economies and also puts pressure on the European Central Bank to raise interest rates. CPI data may not affect the markets significantly because CPI is the European Central Bank's mandated inflation target.
- The EURUSD pair is only bearish while trading below the 1.1400 level, key support is found at the 1.1268 and 1.1216 levels.
- If the EURUSD pair moves above the 1.1400 level, buyers will likely test towards the 1.1470 and 1.1500 resistance levels.
Tuesday 18th December, AUD RBA Meeting Minutes
The Reserve Bank of Australia Monetary Policy Meeting Minutes are published two weeks after the RBA interest rate decision. The RBA Meeting Minutes give a full account of the policy discussion, including factors that influenced policy makers decision and differences of view amongst RBA members.
- The AUDUSD pair is bearish while trading below the 0.7280 level, key technical support is found at the 0.7150 and 0.7080 levels.
- If the AUDUSD pair trades above the 0.7280 level, buyers will likely test towards the 0.7340 and 0.7450 levels.
Wednesday 19th December, USD FOMC Rate Interest Decision
The Federal Open Market Committee meets eight times per year to decide on United States monetary policy and where to set the nations interest rate. Rate changes impact interest rates for US consumer loans, bonds, mortgages and the US dollar exchange rate. The decision of the FOMC policy statement is usually very important, maybe more important than the actual interest rate move made by the central bank, due to it being highly anticipated by market participants. The policy statement includes hints for the future and contains the central bank’s collective outlook on the economy
- The USDCHF pair is bullish while trading above the 0.9990 level, further gains towards 1.0050 and 1.0100 levels remain likely.
- If the USDCHF pair trades below the 0.9990 level, sellers may test towards the 0.9910 and 0.9845 support levels.
Thursday 20th December, JPY BOJ Interest Rate Decision
The Bank of Japan Interest Rate Decision is released by the Bank of Japan and is a consensus between the central banks board members on where to set the rate of interest. The members of the Bank of Japan meet once a month for two days to discuss economic developments inside and outside of the country. Changes in the rate have wide consequences, affecting consumer loans, mortgages, bonds and the exchange rate of the Yen.
- The USDJPY pair is bullish while trading above the 112.90 level, further gains towards 113.50 and 114.54 levels seems likely.
- If the USDJPY pair moves below the 112.90 level, sellers may test towards the 112.00 and 111.50 support levels.
Friday 21s December, CAD Canadian Consumer Price Index
The Canadian Consumer Price Index is released by the Statistics Canada and measures the change in the price of goods and services from the perspective of the consumer. It is the most important indicator of inflation in Canada and the number one measure of inflation the Bank of Canada watches. An increase or decrease in CPI can stimulate the central bank to raise or lower interest rates in order to manage inflation and economic growth.
- The USDCAD pair is only bearish while trading below the 1.3290 level, further losses towards the 1.3220 and 1.3160 levels remains possible.
- If the USDCAD pair trades above the 1.3290 level, buyers are likely to test towards the 1.3450 and 1.3500 resistance levels.