Forex Preview: BoJ, Employment To Take Center Stage

The end of the trading week is nearly upon us, with Friday’s close a little over 24 hours away. The USD continues to perform strongly across the majors. Trend days against the Euro and Swiss franc are the highlights, with upcoming economic events promising to bring further action to the forex.

The Bank of Japan (BoJ) Interest Rate Decision and employment metrics out of the U.S. and Canada are the headliners going into the weekend. Here is the lineup for the next 24 hours:

Country                          Event

China                              CPI (Jan.)

Japan                             BoJ Interest Rate Decision, Policy Statement

Germany                        Imports/Exports (Jan.)

U.K.                                Industrial/Manufacturing Production (Jan.)

Canada                           Unemployment Rate (Feb.)

U.S.                                 Unemployment Rate (Feb.)

The primary market drivers of this group are the BoJ Statements, U.S. Unemployment, and Canadian Unemployment. U.S. Unemployment is expected to drop to 4.0%, while the Canadian metric is to hold at 5.9%.

There is an added emphasis on the U.S. Unemployment number. 4.0% has long been stated as the measuring stick for American productivity. If the number comes in at 3.8% or 3.9%, look for the USD to make big moves against the other majors. Sub-4% U.S. Unemployment will be taken as an extremely bullish sign of U.S. economic performance and guarantee a FED rate hike on March 21.

Crypto Meltdown

Yesterday’s negative performance has given way to even more bad news on the cryptocurrency front. Earlier, Japan’s Financial Services Agency (FSA) shut down two cryptocurrency exchanges ordering them to cease operations for a month. On the heels of Coinbase refusing Ripple (XRP) and the SEC ordering platforms to register as formalized exchanges, cryptocurrencies are tanking yet again.

Performance of the big four cryptos has been dismal for the second day in a row:

Coin                                Performance     Price (Approximate)

Bitcoin (BTC)                        -4%                           $9,400

Bitcoin Cash (BCH)              -5%                          $1,030

Ethereum (ETH)                   -4%                           $ 715

Litecoin (LTC)                       -1%                            $ 178

The moderate losses from LTC are encouraging, showing that traders are still interested in the asset class, but are not excited about tying up huge chunks of capital. However, BTC is still driving the train. Investors are definitely spooked — if trade is not re-established above $10,000 soon, bears will be licking their chops. In a market that is driven by big round numbers and news reports, $5000 BTC becomes a very real possibility.

Overview

Going into the final session of the week, we are in for some heavy forex action. The odds of strong employment metrics being released tomorrow is very good. The USD is in position to extend today’s gains by week’s end.

Volatility brings us trading opportunities. Be sure to tune into my colleagues Rowan, Arslan, and Skerdian for live coverage and analysis as the Asian, European, and U.S. sessions unfold.