Forex Week Ahead: Top 5 Events to Watch This Week (Sep 17 – 21)
Arslan Butt • 3 min read
What’s up, traders.
I hope you are having an awesome weekend. The second week of September remained extremely volatile in the wake of many high impact events, especially the monetary policy statements from the BOE and ECB along with the U.S. inflation report. The U.S. consumer price index missed expectations but retail sales were just fine, helping dollar recover some earlier losses. The Fed remains optimistic about the economy and consumption.
Alright, this week is likely to be less volatile than the previous two weeks. However, we have some major events on the docket and it’s really worth trading them.
Top Five Economic Events This Week
1) JPY – Monetary Policy Statement
The Bank of Japan is due to release the monetary policy event on Wednesday, Sep 19. For newbies, the Bank of Japan has the loosest monetary policy in the developed world with interest rate in the negative territory. That’s due to the fact that the Japanese economy faces a deflation risk and their core inflation is a way far from BOJ’s 2% target. Therefore, the BOJ is widely expected to keep the Policy Rate rate unchanged at -0.10%.
Governor Haruhiko Kuroda will present updates in his press conference. An upbeat remark on the recent rise in GDP could push the Yen a bit higher.
2) GBP – Consumer Price Index
The Office for National Statistics is scheduled to release the inflation data at 9:30 (GMT). Fellas, the CPI shows a change in the price of goods and services purchased by consumers. The Bank of England boosted rates in August after inflation had picked up. However, the prices are still not moving anywhere as economists have forecast the inflation rate of 2.4% which is below the 2.5% rate in July. The Sterling is likely to remain under pressure as the investors will be factoring in the weaker inflation forecast. That’s what we call ‘buy the rumor sell the fact’.
3) CHF – SNB Monetary Policy Assessment
Traders, the SNB stands for Swiss National Bank and they are responsible for controlling the money supply in Switzerland. Since SNB only meets 4 times a year, their policy assessment is worth watching to derive the market trends for next 3 months.
Monetary Policy Assessment is the primary mechanism the SNB Governing Board practices to communicate with investors about monetary policy. It includes the result of their decision on interest rates and analysis about the economic conditions that affected their decision. Most importantly, it projects the economic outlook and offers clues on the outcome of future rate decisions.
The Swiss National Bank has held its policy unchanged since it lifted the peg beneath EUR/CHF on January 15, 2015. Since then, it sustains the Libor Rate at -0.75%, deep into negative territory. As per the market sentiment, they are not expected to modify their policy in the forthcoming meeting. However, they may start speaking about an exit plan from the negative interest rate, a move that could heighten the value of the Swiss Franc.
4) NZD – Gross Domestic Product
On Wednesday at 23:45 (GMT), the change in the inflation-adjusted value of all goods and services produced by the economy. The nation publishes Gross Domestic Products only once in a quarter and does place a hard impact on the market. The New Zealand economy is expected to show a growth rate of 0.8% vs. 0.5% in the second quarter. So until the release of actual figures, we need to look for bullish trades in the Kiwi.
5) CAD – Consumer Price Index
The Bank of Canada plans to raise rates in October, assuming a successful NAFTA deal is resisted. But Stephen Poloz and his partners will require data to confirm such a move. Headline inflation grew by 0.5% in July while Core CPI inched behind with a more modest 0.2%. The Bank of Canada needs to see a significant rise in inflation in order to justify a move.
Summing up, the early two days of this week are likely to be technically driven while rest of the week will be fundamentally important. So, stay tuned to FX Leaders Economic Calendar for the live coverage of these events!