Weekly trading forecast April 22 - 26

Although the upcoming trading week is short due to the Easter Monday celebration in ten countries, the trading volume and volatility should come back to the global financial markets. Two major central banks will announce interest rates decisions and economic statements - the Bank of Canada and the Bank of Japan. The world’s leading economy - the United States - will report preliminary reading of GDP growth in the first quarter of 2019. Several other regions will publish macroeconomic reports on inflation, employment, consumer sentiment and exports volume. Cyclical demand/supply relation data will influence the commodities market, while trade talks between the US and China will get back into the market’s focus.

Monday, April 22.

The Asian and European trading sessions could be comparatively quiet as many exchanges will be closed for holiday, but the price action should wake up on New York open as US traders will work on Monday. Traders will focus on the Housing sector in the United States. Friday’s data was disapoining and investors dod not have a chance to express their reaction as the markets were closed. However, Existing Home Sales report might come together with higher volatility as the data is expected to pick up the growth momentum in March. The most vulnerable benchmark might be S&P 500 as futures contracts declined last week, although other stock indices grew. US 10-year Treasury yields should show investors’ sentiment in the fixed-income market after the long weekend.

Tuesday, April 23.

The trading activity will be resumed on Tuesday after Australian Manufacturing and Services Purchase Managers Index. Expectations are in line with the previous period, however, a positive surprise might lift the Australian dollar versus other major currencies, especially the Japanese Yen. Japanese Manufacturing PMI is also a risk factors for USD/JPY and AUD/JPY currency pairs. The Bank of Japan will publish Core CPI report, which will be monitored by investors in the light of upsoming rate decision by the regulator later this week. The New Zealand dollar will try to recover some of past week’s losses after the Credit Card Spending report. Canadian Whole Sales will be the last report before the Bank of Canada’s meeting, so a higher volatility might be seen for the USD/CAD currency pair. The US economy will report Redbook financial survey, New Home Sales and House Price Index. Richmond manufacturing and services indeces will be in the market’s focus as well.

Wednesday, April 24.

Wednesday will be a massive day for the Aussie as the local economy will report CPI data in the first quarter of 2019. Inflation is forecasted to slow down compared to the fourth quarter of 2018, and that would be a negative factor for the Australian dollar as RBA meeting minutes clearly showed that the regulator is intended to cut the interest rates this year if the data was in favour for that. The lack of inflationary pressure would become a strong trigger for the regulator to ease the financial conditions in Australia. Falling gold prices and global economic growth concerns are also risk factors for the currency. European traders will watch German Business Expectations, Current Assessments as well as IFO Business Climate Index. The European Central Bank will publish its Economic Bulletin, which might reinforce the selling pressure on the euro versus the US dollar and Japanese Yen. British CBI industrial trend orders will be released later, and the Sterling traders could get additional support if the data were positive. The main event of the day will be the Bank of Canada’s meeting and rate decision. Although traders expect the regulator to stay pat on interest rates, the financial statement and press conference might have a decisive impact on the USD/CAD currency pair. The last meeting showed that BoC Governor was concerned about the negative impact on the economic growth, global disbalances and the lack of robust data in the housing sector. Reports improved somewhat, but there is a considerable doubt that optimism would be enough to change the regulator’s dovish rhetoric. USD/CAD might test 1.3500 highs if those suggestions confirmed. Another essential report for the oil market is the US crude oil inventories to be published almost at the same time with the BoC press conference. Last week’s data was unable to lift oil price, which stuck below $64.00 per barrel. Therefore, any upside surprise in figures might send oil prices to a deeper bearish retracement.

Source: currency-graphs.com

Thursday, April 25.

Australian and New Zealand exchanges will be closed for a holiday, so AUD/USD and NZD/USD might trade in a tight range on Thursday. However, AUD/JPY and NZD/JPY, as well as other Japanese yen cross-rates, might face significant volatility as the Bank of Japan will announce the interest rate decision. BoJ Monetary Policy Statment and press conference would also be a massive driver for USD/JPY, which could breach the resistance level of 112.00 yen per dollar if the regulator was more dovish than some analysts expect. The recent data was somewhat mixed, so it’s hard to expect meaningful changes in BoJ rhetoric. The most likely scenario is that the regulator will leave the interest rates unchanged and express readiness to act if needed, underlining possible supportive measures and softer monetary policy for local exporters. US Core Durable Orders and Initial jobless claims might also become a favourable factor for USD/JPY as the US economy shows robust growth in the first quarter despite some slowdown.

Friday, April 26.

Friday’s Trade balance update might be crucial for the New Zealand dollar. The currency dropped last week on the back of weak inflation report, and the trade balance might add fuel to the fire. NZD/USD is nearing significant technical support level, and if the bears were able to breach it, the pair might lose the ground. Japanese Jobs/Application ratio and Tokyo Core CPI will continue the series of important fundamental events for the Japanese Yen. Australian inflation is a risk factor for the Aussie. French consumer confidence will be released in Europe. However, the main event of the whole trading weel is the US GDP report for the first quarter of 2019. So far, economists predict the headline figure to come in at the level of 1.8% quarter-on-quarter compared to 2.2% previously. GDP Price index s also predicted to slow down to 1.5% versus 1.9% in Q4 2018. However, several US reports were able to beat the market’s expectations and consensus. If the GDP report were released stronger-than-expected, then the US dollar index would soar, and stock indices would rewrite historic highs. Michigan Consumer Sentiment Index will close the busy trading week.
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