Weekly trading forecast February 11 - 15.

What a trading week is coming up in the financial markets! Recent risk-assets' surge is in danger after the previous week showed fear trade mode on the back of traders' negative sentiment. The volatility should jump even more for major financial instruments amid the importance of events and trade talks this week. Chinese traders will come back to work after the week of absence due to the Spring Festival celebration, bringing more trading volume into the market. The geopolitical side of things will play a major role in the price action as U.S.-China trade talks approach the finish line before the deadline on March 1. UK Parliament will vote for Brexit deal conditions while Premier Minister Theresa May will travel to Brussels with an attempt to renegotiate several weak points of her deal with the European Union. The Reserve Bank of New Zealand will meet for interest rate decision and economic projections update. Gross Domestic Product reports will be published in Japan, Britain and the EU with the pack of other crucial macroeconomic data across the globe. Even US data should start coming in after the shutdown delay with inflation report and retail sales reports. Not enough? Add here the economic calendar traditionally hot this time of the year and you will get the mixture of factors influencing wild price action in the financial markets this week.

Monday, February 11.

Talks and rumours about the global economic slowdown could be in investors' focus starting from Monday as the second largest world's economy reports consumer price index and credit market updates. That news will be also important for emerging markets across the globe and any improvement might lead to another wave of risk appetite. Otherwise, a deeper decline of risk currencies, including Chinese yuan, Australian and New Zealand dollars, might be noticed. London trading session will kick off with the GDP report last revision for the fourth quarter of 2018. Analysts forecast a downward revision to 1.4% year-over-year versus 1.5% published previously and to 0.2% quarter-over-quarter compared to 0.6% in the last reading. On one side, that's a negative factor for the British pound which struggles to pick up the bullish momentum on the back of Brexit uncertainty. However, comparatively low expectations leave a room for positive surprise and, if that confirmed, GBP/USD could soar in the same way as it did last Thursday during MPC Governor Carney's press conference. Manufacturing production and trade balance reports are also due to release at the same time with the GDP report and they might even have a decisive role in the traders' reaction. Canadian trade balance and the US PCE price index will influence the American trading session on Monday.

Tuesday, February 12.

Both Australian and New Zealand dollars crashed last week amid RBA dovish statement and weak data. Therefore, investors will be watching Tuesday's reports more closely and higher volatility might affect exchange rates. New Zealand electronic card sales report and Australian NAB business confidence could affect AUD/USD and NZD/USD falling further South if the figures appeared to be negative. OPEC will publish its monthly report and WTI Crude traders will try to find any cue in the scope of global supply changes. If oil exporters were able to cut the output significantly in order to stabilize the market, then we might see a price of $55 per barrel instantly. Otherwise, a deeper slide might take place as the global demand concern still weighs on black gold. RBNZ is going to publish interest rate decision and economic statement at 08:00 PM GMT and there is nothing to expect but dovish rhetoric by the regulator. The Central Bank's concern is related to weak local data, as well as global economic slowdown which plays a huge role in the export-oriented economy. The press conference will also bring additional volatility for NZD/USD and NZD/JPY, so small accounts should stay out of the market at that time.

Australian and New Zealand Dollar

Wednesday, February 13.

Nervous traders should beware of the Wednesday’s price action. Helmets and seductive pills will be needed for Sterling traders as the UK Parliament is scheduled to vote on Brexit deal. The vote is tentative so it's hard to predict the exact time of the volatility spike. The only thing to guarantee is that British traders will be active during the release of Consumer and Producer Price Indexes at 09:30 AM GMT. Economists predict almost flat figures compared to December's inflationary pressure with the only exception of CPI month-over-month which is expected to drop by -0.7% versus 0.2% growth previously. That's definitely the risk factor for GBP/JPY and other Cable pairs. European Industrial production will be published a bit later and it's extremely important in the light of the upcoming GDP report, as well as EU leaders' two-day meeting which should enlighten investors about monetary policy prospects. US economic calendar is also packed with events: Core CPI, Goods trade balance, Housing starts and Unit Labour costs will be influencing the greenback's price action. Crude oil inventories report is the key event for black gold speculators. The market consensus should be updated later, so stay tuned. Anyway, the sharp spike of action is guaranteed.

Thursday, February 14.

The Asian trading session will be busy with absorbing Japanese Gross Domestic Product preliminary release. Expectations are quite high given the softness of recent data and negative surprise is likely. For instance, the year-over-year Q4 GDP is predicted at the level of 1.4% while the Q3 report noted a decline of -2.5%. USD/JPY and other yen cross-rates will be vulnerable to a slide in case if pessimistic expectations turned into reality. European Q4 GDP is the most important report for EUR/USD this week. The pair could slide to year-to-date lows if the report failed to meet investors' expectations of 1.2% growth quarter-over-quarter. US PPI and Retail sales will influence the greenback's fate in New York, while Canadian Manufacturing Sales, ADP Non-Farm Employment change and New Housing Price Index will affect USD/CAD. The Chinese trade balance is also scheduled for Thursday but the time is tentative. The only thing to be confident about is that all financial markets will be monitoring the event very closely and the impact could be huge.

Friday, February 15.

RBA Assistant Governor Kent will speak in Australia, trying to fix the damage brought to AUD/USD be Lowe last week. Or maybe the regulator is glad to see the local currency weakening in the light of additional competitive advantages for Australian exporters and Kent will try to develop the success talking in a more dovish manner. Japanese Industrial Production will be crucial for yen traders, so AUD/JPY is definitely going to shake out the borders of recent ranges, most probably, in Southern direction. Spanish Inflation and Italian industrial production should have a limited impact on EUR/USD in contrast to the EU Trade Balance report. British Retail sales report is going whether to confirm or deny Carney's suggestion of stagnating economy, while the US Core Retail sales report, Import and export price indexes will definitely have an impact on greenback's demand across the board on Friday.

Source: financial-markets
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