Last week several important economic updates influenced the Forex market. US preliminary GDP fell less than expected (0.6% actual vs. 0.7% forecast). Below you will find the key events to trade on during the week from August 29 to September 2.
Euro strengthens versus greenback on optimistic comments of Draghi
On Thursday, the currency pair EUR/USD rallied during a volatile session on optimistic comments by the head of the European Central Bank Mario Draghi as for the prospects for the euro zone's economic growth. At the time of publication, versus the evergreen buck the common currency added to 12198 gaining 0.3%, having dived to 1.2160 area earlier.
The ECB, following the meeting, expectedly kept all the parameters of the monetary policy intact. To be exact, the basic interest rate on loans was left at zero level; the deposit rate was left at the level of minus 0.4%, the rate on margin loans remained at 0.25%. As for the main wording of the statement following the gathering, it remained the same too. It also applies to the volume of incentive programs (the EU’s key financial institution will keep buying assets of 30 billion euros a month until the end of September this year or even longer if required). The buying of assets will continue until the Board of Governors observes a steady correction of the inflation trajectory in compliance with the target level, as the ECB informed.
ECB President Mario Draghi, delivering a speech at a press conference following the gathering, expressed confidence in the economic performance of the eurozone, notwithstanding the recent slowdown in surge. Additionally, the ECB Governor stressed that he closely watches the strengthening of the common currency, but added that the regulator didn’t discuss the volatility of the exchange rates at the gathering.
Draghi pointed to a number of temporary factors, which contributed to the recent deterioration in several major economic reports. Among them were strikes, cold weather as well as Easter holidays.
Besides this, ECB Vice President Vitor Constancio told that the ECB could get back to utilizing non-traditional monetary policy instruments for the purpose of stimulating the recovery of the euro-zone economy.
Last week, there were sharp swings in USDJPY, a decline in oil prices, and a surge in Tesla stock. What's next?
Geopolitical factors and inflation remain the main drivers of financial markets. Let’s see how to use that in trading!
Main news that will drive the market in the upcoming week include CB Consumer Confidence Index, Canadian GDP, and US Core PCE Price Index
The Federal Reserve (Fed) will announce its Interest Rate Decision and make a statement about the future monetary policy on Wednesday, September 21, GMT+3. After the higher-than-expected inflation numbers published on September 13, there’s almost no doubt the Federal Reserve will come up with another 75-basis-point rate hike. However, surprised by the CPI numbers, several Fed members announced the possibility of a 100-basis-point rate hike on Wednesday.
Every week we expect many interesting events that can shake the market.