The US dollar index keeps rounding above the 103.60 historical support level. The buyers have already defended this level for three weeks, highlighting their interest in the greenback. Thus, buying USD looks less risky right now.
Important events on February 10-14
Flipping the page
The theme of the last week has been Coronavirus. It did suppress stock markets to a certain extent, especially in China, and made them tilt towards safe-haven currencies in Forex. In general, however, the negative consequences of the virus outbreak have been mostly shaken off by the market. To investors, this event may have even brought an unexpected opportunity to buy stocks at lower prices, which would otherwise keep rising. More to that, to facilitate the resumption of normal economic functioning, China lowered tariffs to the US goods, which would otherwise stay barred as a lasting legacy of the two-years trade war. None of that helps over 30,000 infected people, of course, but apparently, no tragedy comes without an ironic benefit on the flip side of the event.
Long live the Queen
Now as Brexit is done and December 2020 is 11 months away, the British economy has 11 months to adapt to new conditions. In the meantime, the UK Prime Minister is doing his best to reconfigure the UK’s trade bonds to step into the future on a better note. Whether the US-UK trade agreement to come helps that – we are yet to see, but the objective indicator of the economy will stay as it has always been: production. Hence, GDP will be a good marker of the progress. Tuesday will bring us the preliminary monthly GDP, which refers to the month of December. Hence, we will have a clear picture of how the British economy concluded the year and on which note it has entered 2020. That will give us hints on how the GBP will behave.
How Kiwi is doing?
We do not pay as much attention to the actions of the Reserve Bank of New Zealand, but it makes sense to do that. The NZD was very much boosted the last time the monetary policy makers made their interest rate announcement. Hence, if there were reasons for a hawkish move that time, Wednesday may bring a similar picture. That may be even a stronger possibility due to the fact that – once again, a tragic irony being played out well by the currencies – Australia still needs to recover from the bushfires. Consequently, the shaken AUD leaves a lot of space for the NZD to gain weight. Let’s see what the RBNZ brings to the table.
Nothing about America?
But of course, we cannot leave the US aside. On Thursday, the monthly CPI will be announced, shedding light on the price situation, and on Friday, retails sales will be announced. Obviously, no major movement of the USD should be expected (unless the market gets surprised on either of the indicators) as it normally is on the NFP day. But still, these announcements may give interesting opportunities to open positions with the USD.
On the H4 timeframe, the US dollar index has formed a bullish falling wedge. At the beginning of the trading session, the price is testing the upper border of this wedge. Thus, in case of a higher-than-expected Core PCE Price Index m/m, the US dollar will skyrocket against other currencies.
Happy Wednesday, traders! We went through the Internet and found the best news for you, take a look!
This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.
S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.
The United States Bureau of Labor Statistics will publish the US Consumer Price Index (CPI) m/m on January 12 at 15:30 GMT+2. The index measures a change in the price of goods and services purchased by consumers.