Weekly trading forecast Aug 13 - 17

The upcoming trading week becomes more important in the scope of last Friday events and the nearing September active season. Will the recent sharp movements in the financial markets continue and start a huge trend? Or will we see a reversal and the things will get back to normal? We will try to find answers to these questions in this article. But the first thing for traders to look at is potential weekend gaps, which might indicate the further direction of the market for upcoming days if not weeks.

Monday, August 13.

It is an important trading day to watch the price action closely because it will give a lot of information about possible calm down of the turmoil which occurred on Friday. In this case, we might make a conclusion that the worse things are behind and the market conditions are back to normal. But on the other hand, if the price momentum will continue to shake the markets with enormous volatility, it would be a sign of continuation or even be worsening. Traders should turn on more aggressive style in such scenario. Anyway, the economic calendar is almost empty on Monday. The only important event to watch is the monthly OPEC report scheduled to be published. Crude oil prices had a rebound last Friday and there are some rumours that oil exporters might have an additional agreement to cut the overall output which could lead to further strengthening of the commodity price.

Tuesday, August 14.

Australian NAB Business confidence, Chinese and Japanese Industrial Production will be the headlines catching traders’ attention on Tuesday Asian session. All these reports are important not only for AUD, CNH and JPY respectively but also for the worldwide economic situation and the overall risk appetite which has been lowering this summer. European session starts with German GDP report, which is expected to grow faster in the second quarter than at the beginning of the year: 2.5% yearly and 0.4% monthly. Inflation figures from Germany, France and Spain are going to confirm the ECB dovishness most likely. But on the other hand, any disappointment of the economic reports above might lead to further selloff for all Euro currency pairs, especially versus the greenback. In addition, German and European ZEW Economic sentiment is also must-watch for Euro traders. Average Earnings Index, Claimant Count Change and Unemployment in Britain are the reports to monitor for pound traders. But there are low chances that these could change anything in the GBP/USD sustainable downtrend. The Americal trading session will be determined by the U.S. Export and Import price indexes.

Wednesday, August 15.

The busy trading week resumes with Australian Westpac Consumer Confidence and Wage Price Index. There is also a huge pack of data to be released in Britain at 09:30 AM GMT on Wednesday: CPI, PPI and Core CPI report should confirm or deny the BoE recent dovishness. Retail Sales and Crude Oil inventories will be in focus for the U.S. traders on the other side of the Atlantic. These reports are crucial for the greenback and price of oil respectively. In addition, Industrial Production and Business inventories would become further bricks into the wall of tightening cycle the Federal Reserve, according to the market consensus. More demand for the U.S. dollar to expect in case if all this news will be released on a positive tone.

Thursday, August 16.

Thursday kicks off with Japanese economic reports crucial for the exporters, who determine the overall business activity of the third largest economy in the world. Adjusted Trade Balance, Exports and Imports growth in Japan - these are the headliners for the Asian session. Australian Employment Change could be a weak point for the Aussie since this issue has been noticed by the RBA officials during their last statement. A further slide of AUD/USD might be in place in case if the reports would fail to meet even modest market expectations. Retail Sales in Britain to be published on Thursday and this could become a safety point for the pound bulls because the expectations are quite robust for this part of the British economy. The U.S. Building permits and housing starts are not expected to have any significant impact for the greenback whilst the Philadelphia Fed Manufacturing Index is one of the main indicators of the economic health and this report has influence for several sectors of the main Stock Indices: S&500 and DJIA. Anyway, the volatility might rise. Canadian dollar traders will keep an eye on ADP Nonfarm Employment change, especially in the light of surprisingly strong employment report last week. Manufacturing Sales report is important for the Bank of Canada in the scope of further tightening as the next meeting is scheduled for September, the 5th.

Friday, August 17.

New Zealand PPI report might support falling NZD/USD. Another commodity currency, Australian dollar, will be looking for some support from the officials as long as RBA Governor Lowe’s and his assistant Ellis’s speeches are planned for Friday. EU Current account and CPI Inflationary data will close the trading week in Europe. In case if CPI came out strong beating the expectations of 2.1% on yearly basis, we might see some support for the EUR/USD currency pair because the absence of the inflationary pressure holds ECB from stopping the quantitative easing program. The biggest weekly event on Friday is for the loonie bulls (USD/CAD bears): CPI (2.5% YoY) and Core CPI (1,3%) will be the decisive factors for Bank of Canada to hike the interest rate in the upcoming meeting. Traders would not wait for September to sell USD/CAD in case of strong readings from both reports.

Source: FBS
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