Weekly trading forecast November 5 - 9

The upcoming trading week is extremely important for the financial markets worldwide in the scope of one single question: whether the last week’s price action was the reversal or should traders come back to the risk-aversion mode? Three major central banks meet this week for rate decisions. RBA and RBNZ hold their press conferences about the economic outlook in Australia and New Zealand mid-week. The world leading economy’s central bank - the Federal Open Market Committee - will meet on Thursday evening. The vast majority of traders and investors worldwide will try to catch every single word in the Federal Reserve’s statement after the rate decision which is widely expected to leave the interest rates unchanged. Any hawkish rhetoric in regulator’s sentiment would lift the global reserve currency - the U.S. dollar - towards further strengthening. Emerging markets, as well as high-yield assets, will be also dependant on that decision and future expectations.

Monday, November 05.

The Asian trading session and trading week will start with Japanese Monetary Policy Meeting Minutes statement. BoJ Governor Kuroda is going to speak about the interest rates and economic perspective in the third largest economy in the world. USD/JPY is forecasted to keep strengthening not only on that news but also on the overall risk-on market’s sentiment, especially in equities. Chinese Caixin Services PMI report is also important for the emerging markets and export-oriented countries. The European trading session will start with Spanish unemployment data which is expected to improve in October. Services PMI in Great Britain is about to answer the question regarding the economic uncertainty. Sterling will be also vulnerable to updates from the Brexit negotiations front. British Prime Minister Theresa May stated during the weekend that 95% of the deal with EU is agreed. If that confirmed, the cable will soar versus all of the major currencies with GBP/JPY leading the gains. The U.S. economy will report ISM Services, Manufacturing and Non-Manufacturing PMI indices. Stock traders will monitor those reports closely to find a supportive fundamental data for the equities’ recovery.

Tuesday, November 06.

The main event for the financial markets on Tuesday is the Reserve Bank of Australia rate decision and statement. Both news due to being published at 03:30 AM GMT. Although the ‘unchanged’ verdict is widely anticipated, Aussie bulls will be seeking any positive comments from the regulator’s economic outlook in order to support AUD/USD and prevent it from further sliding. The currency has been oversold recently and we expect a certain recovery if not complete reversal towards an uptrend. French, German and EU Services PMI reports will be the headline events during the European trading session and EUR/USD traders need an improvement in that data just to be supported by fundamentals. Otherwise, the single European currency might keep declining versus the greenback. New York will open with JOLT Jobs opening weekly report and a strong reading is expected as the NFP was robust on Friday. The U.S. dollar’s demand will depend on whether the stock indices will be trading on a positive tone or sellers will dominate before the Fed’s meeting.

Wednesday, November 07.

New Zealand economy will report Employment change and Labor Cost Index. NZD/USD will have a volatile reaction on both possible outcomes of that report as t RBNZ will take that news in count in their meeting later this week. A volatile trading session is expected in Asian markets with Japanese yen in focus as Leading Index and Coincident indicators will be published. German Industrial Production and European Retails Sales will whether confirm or deny the rumours about the Eurozone economy slowdown. If those reports showed an improvement, EUR/USD might soar above 1.1500 level. Halifax House Price index will be published in the UK, however, it might be completely ignored by sterling traders because of the Brexit negotiations overshadowing any other topics. Canadian Ivey PMI, as well as Crude Oil Inventories, are important for Loonie traders. Although, we expect USD/CAD to stay in the same tight consolidation range for a while unless something extraordinary happens. RBNZ interest rates decision at 09:00 PM GMT will finish the busy trading day. The overall outlook is the same to Australian central bank and the only thing to guarantee for NZD/USD currency pair is high volatility.

Thursday, November 08.

The volatility is expected to come down significantly on the other assets as traders will be expecting the Federal Reserve meeting, interest rates decision and statement later on Thursday. Such reports as Current Account in Japan, the Unemployment rate in Switzerland, German trade balance and EU economic bulletin, could be completely ignored by currency traders. The only exception might be Chinese Exports and Trade Balance data which is tentative. Investors were concerned about the economic growth in the second largest economy in the world and any positive news might lift emerging markets overall. American trading session is expected to be quiet before the Fed’s meeting as well. Equities would keep sliding on New York opening just because buyers would prefer to wait-and-see trading strategy. The main reason for the market crash in October was exactly the Federal Reserve Chairman Jerome Powell’s speech in September. He scared investors by expressing much more hawkish views on the inflationary pressure and interest rates’ acceleration in the United States. If any of those suggestions confirmed by FOMC statement, equities could be sold-off again. Otherwise, a more dovish rhetoric would support buyers.

Jerome Powell
Source: BBC

Friday, November 09.

RBA will publish its monetary policy statement on Friday and AUD/USD will be in focus for currency traders in the Asian session initially. China will report inflation data, both Producer and Consumer Price indices which are important for the government to monitor the efficiency of their supportive monetary measures. The health of the second-largest economy in the world is going to be confirmed also by M2 Money supply and New Loans in the financial sector. All of those reports are crucial for the Chinese currency, approaching an important psychological level around 7 yuan per dollar. The only interesting economic data this week will be published in the UK on Friday with the headline event of Gross Domestic Product growth. The market consensus is at 1.5% level year-on-year and any optimistic reading might increase the odds for sterling’s bullish rally this month. Manufacturing Production and Imports-Exports surplus is also important for the Bank of England to monitor. The U.S. Producer Price Index and Michigan Consumer Sentiment - these are the only reports on the other side of the Atlantic, however, traders will discuss the Federal Reserve mostly, in the scope of further tightening of the financial conditions.
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