Weekly trading forecast February 25 - March 1

What a huge week is expected at the end of February 2019! The main headline is the U.S.-China trade deal which is approaching the deadline of March 1. Even if both sides failed to reach a complete agreement, postponing the deadline would be apprehended as a huge positive factor for the risk appetite in the global financial markets and the vast majority of high-yield instruments including equities and risk currencies would soar. Otherwise, we might see a completely opposite reaction in the traders' sentiment with a dramatic flow in safety if Trump-Xi deal cancelled. The financial markets will also keep a close eye on Federal Reserve Jerome Powell's testimony in the Senate in order to update the monetary policy prospects. A huge flow of US data will be renewed after the government shutdown delay, as well as major global central banks will be focusing on other region's economic reports before the series of monthly meetings in March. So, the best friend of currency speculators - the volatility - will definitely come back to the markets this week.

Monday, February 25.

The Kiwi was hit hard last week and NZD/USD traders will monitor Monday's Retail Sales report closely during Monday’s Asian trading session in order to find some support from the fundamental side of things. Japan's Corporate Services Price index will be in focus of currency traders looking for USD/JPY to break through the recent resistance of 111.00 yen per dollar. The European economic calendar is traditionally empty on Monday with the only exclusion of French BTF auction. EUR/USD price action will be determined mainly by the overall risk-on/risk-off sentiment and demand for the greenback across the board. The only US report worth mentioning is Wholesale inventories.

Tuesday, February 26.

That's the day when the volatility should start rising in the financial markets. BoJ Core CPI will be published in Japan, GfK Consumer Climate index will be released in Germany (expectations are flat with the previous period). It will be also interesting to watch the Bank of England reporting monthly inflation figures during the Hearings in the Monetary Policy Committee. But the real price action should kick off the trading week in the New York trading session. First, US Building Permits and Housing starts will influence the Housing sector. Second, the Redbook survey will be published together with CB consumer Confidence in February. Third, the Fed Chair Powell will start his testimony in the Senate. So, the US dollar should be vulnerable to higher volatility and current outlook is aimed at more weakness rather than strength for the world's reserve currency. In contrast to that, US equities could find another wave of buying demand if the forecasts were confirmed. API Crude Oil stock report will be released on Tuesday as well, affecting the WTI Crude market.

Wednesday, February 27.

New Zealand's trade balance and Australia's Construction sector data will influence both AUD/USD and NZD/USD pairs on Wednesday. Japanese traders will listen to Bank of Japan's Member Kataoka in the scope of monetary policy prospects. If the regulator official confirmed the recent rumours of more supportive measures by BoJ, then USD/JPY, as well as Nikkei 225 benchmark, would soar. Wednesday is also a huge day for European traders: Italian Non-EU trade balance, Eurozone Business and Consumer surveys, Private sector loans, Consumer Inflation expectations, services and industrial sentiments - this is the list of important news to be released. German 10-year Bund auction and French unemployment update will be also crucial for EUR/USD and other cross-rates, so traders should get ready to an extremely busy session. The New York open will come together with the ADP employment data, Durable Goods orders and goods trade balance report. Pending Home Sales and Factory orders will continue the American trading session, so the greenback is expected to chart lots of whipsaws and tails on the intraday chart on Wednesday. The highest volatility could be seen for USD/CAD though, as the Canadian economy will announce extremely important reports of the Consumer Price Index. The influence will be multiplied by the Crude Oil Inventories report published in two hours after that. So, currency traders should not forget taking their helmets on before turning trading terminals on.

Thursday, February 28.

The last trading day of February will start with Japan's Industrial production report, New Zealand Business Confidence and Australia Private Sector Credit data. AUD/JPY and NZD/JPY - these are the currency pairs to focus on during the Asian trading session on Thursday. China's Manufacturing and Non-Manufacturing Purchase Managers Index is due to release a bit later, and its importance could not be overestimated. The trick is that Chinese data is always crucial not only for such high-risk currencies as Chinese yuan, Australian and New Zealand dollars but also for emerging markets currencies such as Indian Rupee and South African Rand. Therefore, it's easy to expect the carry-trade flows' spike right after the report on Thursday, and, as a result, higher volatility of those currencies. Swiss GDP will affect the USD/CHF pair in the European session, while British Nationwide HPI will be crucial for the Sterling pairs including GBP/USD, GBP/JPY and EUR/GPB. French Consumer spending and GDP report will affect the CAC 40 stock index and EUR/USD currency pair, as well as Italian and German CPI reports published later. On the other side of the Atlantic, the headline event is the US GDP report. That's going to be a preliminary reading of the gross domestic product calculation for the fourth quarter of 2018. The first reading and the market's consensus is focused on 2.4% figure quarter-over-quarter compared to 3.4% in the third quarter. So any revision of the headline number will definitely cause sharp shifts in the price action for both equities and currencies markets. The US dollar index will also depend on the GDP Price Index, Chicago PMI and FOMC Member Harker's speech. USD/CAD, in particular, will be influenced by Canada's RPMI and Current Account reports. There’s also a 4- and 8-week bill auction shceduled by the US Treasury, so next Thursday is not the best day to rest for a currency speculator.

Friday, March 1.

Some technical analysts consider that every single month is closed only after its last weekends. Even though this Friday is the first day of March, there could be an active price action as hedge funds and financial institutions will be closing the current month. Besides that, the economic calendar is also packed with crucial events. Australia's and China's Manufacturing PMI, Japan's Tokyo Core CPI and Capital Spending, South Korea's trade balance - all of those events are eye-catching for Asian traders. German Import Price Index, Spanish, French, Italian, German and the Eurozone's Manufacturing PMI - this is the short list of news coming out of the European Union on Friday. British Manufacturing data is also interesting to watch, while EU CPI - is the headline event. The American trading session will be focusing on US PCE deflator, Personal Spending, ISM Manufacturing index, while the Canadian Gross Domestic Product will be the last report before the Bank of Canada’s meeting and interest rate decision in March, so USD/CAD should be overperforming the market again.
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