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.
Evergreen buck soars on dismal EU outlook
On Wednesday, the evergreen buck tacked on versus the common currency due to the fact the euro was suppressed by fears about the euro zone economy. Meanwhile, the UK currency surged ahead of a no-confidence vote in Theresa May's cabinet.
The common currency slumped by 0.13% versus the evergreen buck hitting $1.140, after being suppressed earlier to a 12-day minimum of $1.138. Previously this week, it was reported that Germany managed to escape a recession in the second half of the previous year and ECB Governor Mario Draghi told on Tuesday that the euro zone economy appeared to be weaker than expected.
Outgoing ECB governor Mario Draghi acknowledged the dimmer outlook and his cautious tone added tracking to the common currency’s rebound from three-month maximums. Market experts aren’t assured that the EU’s major bank will be capable of normalizing its monetary policy later in 2019.
In the United Kingdom, May is generally anticipated to retain power in the confidence motion, called by Jeremy Corbyn, the opposition Labour Party leader after a devastating defeat of the prime minister's Brexit divorce pact in the country’s legislative body on Tuesday.
Apparently, defeat of the pact left Great Britain’s departure from the European bloc in disarray 10 weeks before it’s due to take place.
Although the UK currency had tumbled by over 1% versus the evergreen buck early on Tuesday, it tacked on after the parliamentary vote on the pack because traders were assured that the defeat would make the United Kingdom pursue different options as for the European bloc.
As a result, the common currency dived by 0.3% versus the UK pound, reaching a seven-week minimum of 88.44 pence.
The evergreen buck dived by 0.17% against Japan’s currency hitting 108.83 having rallied by 0.5% versus its Japanese counterpart overnight.
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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.