Weekly trading forecast February 18 - 22.

The upcoming trading week is going to be a logical continuation of previous periods with the main target to clarify the current situation in the financial markets across the globe. Several deadlines are nearing in the geopolitical field and it's getting more important to prove optimistic words by real evidence and action. The U.S.-China trade deal negotiations will still be in the markets' focus as the deadline of March 1 weighs on investors' mood. The Brexit saga is also getting to the finish line with the main target to eliminate the uncertainty. Despite the lack of any monetary policy updates and central banks' meetings this week, the interest rates differentials will continue affecting the foreign exchange markets. Traders will stick to central banks officials' press conferences in order to understand regulators' intentions. Several key macroeconomic reports are set to answer the question of an overestimated global economic slowdown, whether to confirm or deny the assumption of a recession in 2019. The commodities markets will be still vulnerable to supply-demand relations, especially for the oil prices as US Crude Inventories report will play the key role in the price action this week.

Monday, February 18.

Although the trading volume is expected to decrease due to the holiday in North America, Monday's price action will be extremely interesting in the scope of how Asian investors will absorb the latest news from the United States and equities' rally seen on Friday last week. Japan will report Machinery Orders in January, Singapore will publish trade balance figures. The rest of the Asian economic calendar is empty so the price action of most of the currencies will be dependant on stock indices. German Buba institute will release its Monthly Economic survey, France will host a BTF Auction for 12-month, 3- and 6-years securities. Emerging markets will focus on Economic Activity and employment figures in Brasil, as well as Russian GDP and inflation reports.

Tuesday, February 19.

The volatility will come back to the financial markets on Tuesday as the Reserve Bank of Australia will release its meeting minutes after the latest interest rates decision. The latest market's reaction was to sell the Aussie on the back of more dovish regulator's rhetoric, however, there is a room for a positive surprise as the previous week showed that things aren't so bad for the Australian economy. The European trading session will start with Italian Industrial sector figures and EU current account in December. The Sterling traders will watch UK reports closely: Claimant Count Change and Average Earnings Growth will be published. The last time both reports lifted the British Pound with surprisingly strong readings. Expectations are quite positive with even more room to go on the optimistic side. Anyway, GPB/USD and GBP/JPY will be vulnerable to a jump of volatility during those events. EUR/GBP cross-rate will be also affected be German ZEW current economic sentiment and Current Conditions update for February. If both surveys failed to meet the market's consensus, the single European currency could slide further down versus the US dollar and other majors. There will be also a couple of interesting speeches on Tuesday: the Federal Reserve Member Mester and the ECB's Praet will host press conferences about the monetary policy prospects.

Wednesday, February 20.

New Zealand economy should confirm RBNZ's hawkishness by Producer Price Index on Wednesday. If the inflationary data was able to keep weighing on the regulator's readiness to tighten the monetary policy, then we would see NZD/USD gaining strength further. Otherwise, a decent pullback could happen. The Japanese Adjusted Trade Balance will be the key event during the Asian trading session on Wednesday. The latest data was not in favour for the third largest world's economy recently, so it's hard to expect the Japanese Yen gaining strength. There are assumptions among analysts that USD/JPY could keep moving North this week. Wage Price Index will influence the price action of the Australian dollar during the busy trading session. The only important European data on Wednesday is the German Producer Price Index. December's inflation was not able to support Euro and January's expectations are also soft (2.2% year-over-year). Therefore, Euro bulls should not count on support from the fundamental side of things. South African CPI report will be crucial for USD/ZAR, which soared above 14.000 recently. Other emerging markets will also keep an eye on that data. The New York open doe not promise any volatile action due to the lack of any major data. However, the Federal Open Market Committee will publish the latest meeting minutes which will definitely wake currency traders up. The greenback might be vulnerable to a sharp sell-off in case if the dovish rhetoric continued in the regulator’s vision of the monetary policy perspective. On the other side, US equities could even accelerate the bullish rally if that confirmed.

Thursday, February 21.

The Australian dollar will be in the market's focus again on Thursday as the Labour market data is due to release. The Employment change headline figure is predicted at the level of 15.2 thousand jobs added in January while December's achievement was more impressive with 21.6 thousand jobs. Any shift in the data would affect AUD/USD and AUD/JPY as investors became sensitive in the fundamental front after the Reserve Bank of Australia did not confirm hopes for an interest rate hike this year. German, French and EU inflation will influence the price action for EUR/USD after European traders will try to absorb updates from the Fed. German and EU Manufacturing Purchase Managers Index will also be crucial for the Euro bulls trying to hold the currency from the further slide. The European Central Bank will also publish Account of Monetary Policy Meeting, which is a risk factor for the currency, especially in the light of recent dovish comments by ECB officials. US Durable Goods Orders and the Philly Fed survey will drive the greenback's price action in America. Canada will release the ADP Non-Farm Employment change and Wholesale sales report, which will affect USD/CAD. Boc Governor Poloz will speak later that day.

Friday, February 22.

RBA Governor Lowe will speak in Australia, trying to clarify the message sent to the markets recently. Japan will publish National Core CPI which is one of the key factors for the monetary policy conditions. It's hard to expect the Japanese inflation to pick up the growth momentum, so the most probable reaction of currency traders should be to buy high-yield currency pairs such as USD/JPY and NZD/JPY. The only condition for that is that global stock indices should keep rising in order to avoid safe-have capital flows. Otherwise, a weaker inflation report might be ignored completely. Germany will release an update for Q4 GDP report and IFO institute's economic survey. Current Assesment, Business Climate Index and Business expectations - those are the main factors to watch on Friday. Europen inflation is also crucial for EUR/USD, however, the report should come in line with the forecasts, so the impact could be limited. Canada's Core Retails Sales report will drive the USD/CAD pair this week, as well as Budget Balance update. Three more important events will take place before the trading week closed: FOMC Member Williams and ECB President Draghi will speak in the United States regarding the financial conditions and global economic growth, while the US Federal Reserve will publish the Monetary Policy Report. High volatility is likely during those events.
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