Good morning, traders.

We’re already in the middle of the week and so far the market has treated us roughly, yet overall we are in green. On Tuesday, the volatility was triggered after the UK MPs backed May’s proposal for her to renegotiate the Brexit deal. Now Theresa May is expected to continue talks with EU leaders in the coming days.

The real game begins today as the US central bank, Federal Reserve, is due to release its policy decision. Investors will also be focusing on the US advance non-farm to predict about non-farm payroll on Friday. So, it’s kind of a busy day and we need to be very careful with our trading decisions.

Watchlist – Top Economic Events Today

EUR – German Prelim CPI m/m

During the European session, most of the focus will remain on the German inflation data. Destatis is expected to release it with a negative forecast of -0.9%, down from 0.1% in December 2018. It’s pretty clear that the ECB President Mario Draghi is quite keen on keeping the policy dovish.

Well, here’s how we can trade it today.
I will be looking to buy Euro only if the CPI figures come out above 0.1%. On the flip side, I will avoid doing anything with Euro if the figure remains around -0.9%

USD – ADP Nonfarm Employment Change

For all the beginners, the ADP (Automatic Data Processing) is also known as an advance NFP. It shows an estimated change in the number of employed people during the previous month, excluding the farming industry and government. The Automatic Data Processing, Inc. releases the figure in the first week of a new month, particularly on Wednesday.

Typically, the ADP figures signal about the Non-farm payroll figures, whether they are going to be positive or negative. Which is why both data share a positive correlation. The ADP non-farm employment change is due at 13:15 (GMT).

Back in December, the private sector report from ADP beat all expectations with an increase of 271K jobs, setting higher standards for the upcoming NFP figures. However, January’s report may be somewhat more moderate as economists are expecting an increase of 170K which is not as strong as December’s figures. The Greenback can stay under bearish pressure today.

USD – FOMC Statement & Federal Funds Rate

At 19:00 (GMT), the Federal Reserve is due to release interest rate decision. The Fed is widely expected to keep the interest rates on hold at 2.50%.

In recent speeches, Fed Chair Jerome Powell and other Fed officials have expressed worries over the risks to global growth and have tempered the expression set by last month’s 25-basis-point policy rate increase.

In January, Fed Chair Powell repeated that view, but at the same time made it clear that if the Fed ever came to a different conclusion, it would not hesitate to change the pace of balance-sheet reductions. This FOMC is very likely to form a bearish sentiment for the US dollar throughout the week.

USD – Crude Oil Inventories

At 15:30 (GMT), it’s worth monitoring the Energy Information Administration’s crude oil inventories. Economists are expecting a build of 3M vs. 8M which can extend slight support to the commodity.

Good luck for today and stay tuned to FX Leaders for more updates.