U.S. and U.K. GDP Releases to be Crucial this Coming Week
The return of most forex traders from the Asian region after the Chinese New Year holidays could usher in more liquidity in the upcoming trading week. Chinese banks are still on a holiday for the first two days of the week though, which might mean limited forex price action. Trading has been particularly subdued in the latter half of the previous week due to these holidays and the uncertainty surrounding the Greek debt talks.
Any last-minute deal struck between Greece and its creditors could spur risk-taking in the financial markets, as this issue has been a major cause of uncertainty in the past days. The anti-austerity Greek government has stubbornly refused to take any deal that would mean more spending cuts for their economy while the EU has insisted that the country should carry on with its bailout program.
Monetary policy meeting minutes and testimonies from central bank officials could play a key role in forex price action, with Fed head Yellen and ECB head Draghi scheduled to give speeches. The FOMC minutes released in the previous week showed a less hawkish tone and Yellen might shed more light on what the US central bank has in mind in terms of a rate hike this year. Meanwhile, the ECB minutes released last week didn’t contain much surprises, as traders now look to Draghi to see if further stimulus is to be expected.
The BOJ is set to print the minutes of its latest policy meeting and possibly show positive remarks on the economy. Although Japan has been printing weak spending and inflation figures, the BOJ has decided to focus on the uptick in exports and output, which has been supported by Japan’s recent trade balance release. Later on in the week, the latest Japanese inflation figures are due and more declines could mean renewed speculations on BOJ easing.
Canada and the US are also set to release their monthly inflation readings and both economies are continuing to expect weaker price pressures. Nonetheless, the US dollar might still stay supported thanks to risk aversion and the Fed’s relatively upbeat stance compared to the BOC.
Euro zone CPI figures are lined up for the latter half of the week, although this might take the back seat if there are any major updates on the Greek debt situation. An increased possibility of Greece exiting the euro zone might mean more trouble for the region, as this could also raise the likelihood of other debt-ridden economies defaulting on their loans and exiting as well.
Lastly, GDP releases this week might also be a key driver of price action, with the preliminary readings from the US and the UK up for release. Bear in mind that these two economies have been outperforming the rest of their peers so far, as hiring and spending have been relatively upbeat for these nations. Upward revisions in GDP readings could mean extended gains for the pound and the US dollar while downgrades could lead to short-term declines.
Other top-tier reports lined up for the week include Australia’s quarterly construction work done, wage price index, and private capital expenditure. So far, the Australian dollar has been able to hold on to its gains, although weak figures could revive talks of another RBA rate cut.
China’s HSBC flash manufacturing PMI might be another report to watch out for, as this could confirm whether the world’s second largest economy is starting to climb out of its rut or not. New Zealand trade balance and visitor arrivals data are also lined up and might spark significant moves among the commodity currencies.