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.
Greenback keeps to its 3.5-month peak
On Thursday, the US currency kept close to the peak of three and a half months versus the pack of other leading currencies. It’s because the revenue on 10-year American government bonds stood above 3%.
Showing the purchasing power of the US currency versus the group of six major currencies, the US dollar index accounted for 91.02, which is close to the high of 91.04, the highest outcome since January 12, displayed on Wednesday.
The evergreen buck keeps growing due to the surge in revenue of American government bonds as well as the prospects for accelerating the Fed's interest rate lift in 2018.
A higher interest rate normally acts as support for the US currency, as it makes dollar assets more tempting for profit-seeking traders. This week, the revenue of 10-year American government bonds surpassed 3% for the first time since 2014. That’s an indication of investor confidence in the good future of the American economy.
The evergreen buck dived against the Japanese yen. The currency pair USD/JPY sank 0.11% being worth 109.31 after it managed to renew a maximum of two and a half months of 109.46 during night trades.
The common currency remained stable against the evergreen buck. The currency pair EUR/USD was trading at 1.2167, a bit retreating from a 2-month minimum of 1.2158, recorded on Wednesday.
Market participants are waiting for the verdict of the ECB on monetary policy, which is expected to be adopted at a gathering on Thursday. Investors are eager to know whether the ECB officials became more confident in the estimates on the surge of inflation or not.
According to analysts' forecasts, the ECB is going to keep the interest rate intact and it’s going to keep the plan on continuing the financial incentive program until the end of 2018.
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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.