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Markets gear up for an eventful day

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After a relatively quiet start to the week, the markets head into what could likely turn out be quite a handful. Although the Asian session saw little to no major news releases today, starting from the European trading session, a lot of fundamentals are lined up, likely to move the markets, especially the EURUSD which has been caught up trading in a tight range for the past few weeks.

German GDP, Eurozone CPI: Starting off the European trading session, the German GDP data is on the tap with expectations tipped for a 0.7% growth rate followed by the final CPI from the Eurozone with expectations of a -0.6% CPI on the headline and 0.6% CPI on the core. Although the Euro has managed to shrug off the CPI numbers lately, in light of the ECB’s QE program, the German GDP numbers could possibly shed light on the economic activity in the Eurozone’s leading economy. While the QE is expected to kick off in March, the GDP expectations from Germany remain low. Besides the GDP and CPI numbers, the markets will continue to closely follow the developments of the Greece negotiations with the Eurogroup members.

BoE Inflation Report hearings: While the markets have got an overdose of CPI data from the UK, today’s inflation report hearings can certainly weigh in on the British Sterling as Governor Mark Carney and his MPC members testify before the Parliament’s Treasury Select Committee. The inflation report hearings are known to impact the Pound sterling however considering that it was only a few weeks ago that the BoE gave its inflation outlook on the UK’s economy, we could possibly expect today’s hearings to have a limited impact although potentially able to swing the GBP in either direction. Of particular interest will be any comments made on the state of the UK’s labor market which has been showing quite some stellar data as pick-up in wages continues to grow steadily.

ECB Draghi’s speech: ECB President Mario Draghi will be speaking at an event unveiling the new 20 euro note. Although comments are expected to be limited in regards to the monetary policy, the markets would be tuned in nonetheless more specifically about comments on the ongoing Greek debt negotiations which seem to overshadow everything else. The major event from the ECB, however, comes tomorrow as the ECB Chief testifies before the European Parliament in Brussels on the monetary policies undertaken by the Central Bank.

Janet Yellen’s testimony: Fed Chair Janet Yellen, will take center stage later during the US trading session as she testifies before the Senate Banking Committee. Given that the Fed’s monetary policy and its minutes have been largely mixed, the markets will be looking for any comments in regards to the interest rate hike timetable, which of late has been confusing. Although the Fed has ruled out a rate hike in March, a June hike is still a possibility. But this view has taken a hit as the most recent Fed minutes showed that most of the FOMC members were comfortable with keeping interest rates low for a longer period of time. In this aspect, the Senate Banking Committee is quite likely to stress upon the Fed’s intentions of interest rate hikes, which could potentially bring volatility into the markets, both equities, fixed income and the currency markets as well.

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