Rate decisions and GDP releases headline the economic calendar

Rates and GDP

During the upcoming week interest rate decisions from the European Central, Bank of Japan, People’s Bank of China, and Bank of Canada headline the economic docket. The ECB rate decision will be the main event amongst the central bank rate decision this week, following the recent stimulus measures that the ECB put in place to help the EU economy. Traders will also be closely watching Q4 GDP numbers from China, at a time when the world’s second-largest economy continues to be a bright spot for global growth.

This week we also see the release PMI Manufacturing data from a number of European economies, and Manufacturing and Services data from the United States and United Kingdom economies. Monthly jobs figures from the Australian economy will also be closely watched by traders this week.

Monday 18th January, Chinese Q4 GDP

Chinese quarterly Gross Domestic Product is released by the National Bureau of Statistics of China, and measures the national income and output for the world’s second largest economy. Chinese GDP is equal to the total expenditures for all final goods and services produced within the country in a stipulated period of time. It is also considered the primary indicator of the Chinese economy’s health.

• The AUDUSD pair is only bullish while trading above the 0.7650 level, key resistance is found at the 0.8000 and 0.8200 levels.
• If the AUDUSD pair holds below the 0.7650 level, sellers may test towards the 0.7500 and 0.7350 levels.

Tuesday 19th January, German ZEW Survey

The Center for European Economic Research releases the ZEW survey for financial experts across Europe on a monthly basis in order to create a mid-term forecast in regards to Germany's economic situation. The survey's responses are restricted to positive, negative or unchanged for all components. Due to the simplicity in its structure, the survey is quick and efficient in terms of turnaround time. Experts are also asked for a qualitative assessment of the inflation's direction, interest rates, exchange rates and the general stock market within the following six months.

• The EURUSD pair is only bearish while trading below the 1.2060 level, key support is found at the 1.1960 and 1.1860 levels.
• If the EURUSD pair moves above the 1.2060 level, key resistance is found at the 1.2125 and 1.2200 levels.

Wednesday 20th January, Bank of Canada Rate Decision

The Bank of Canada Interest Rate Decision is announced by the Bank of Canada, and is closely followed by the central banks latest monetary policy statement. If the Bank of Canada is hawkish about the inflationary outlook of the economy, and rises the interest rates it is positive for the Canadian dollar currency. If the central bank has a dovish view on the Canadian economy and keeps the ongoing interest rate it is seen as negative for the Canadian dollar.

• The USDCAD pair is only bearish while trading above the 1.2800 level, further losses towards the 1.2500 and 1.2390 levels remain likely.
• If the USDCAD pair trades above the 1.2800 level, buyers may test towards the 1.2900 and 1.3000 resistance levels.

Thursday 21st January, ECB Rate Decision

The European Central Bank's interest rate decision is made by the ECB Governing Council on whether to either increase, decrease or maintain interest rates. The key mechanism behind the monetary policy is the control of interest rates. After the ECB Interest Rate Decision is announced, the European Central Bank holds a lengthy monthly press conference with ECB President Christine Lagarde delivering a prepared statement. 

• The EURGBP pair is bullish while trading above the 0.9040 level, key resistance is found at the 0.9110 and 0.9240 levels.
• If the EURGBP pair moves below the 0.9040 level, sellers may test towards the 0.8870 and 0.8750 levels.

Friday 22nd January, EU Manufacturing PMI

The EU Manufacturing Purchasing Managers Index is released by Markit Economics and 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 50 indicates expansion in the sector and below 50 indicates contraction.

• The EURJPY pair is only bearish while trading below the 125.00 level, key support is found at the 123.80 and 122.00 levels.
• If the EURJPY pair trades above the 125.00 level, buyers will likely test towards the 126.00 and 126.40 resistance levels.