The spring is coming in the financial markets and a spike of activity and volatility should not surprise traders, especially as there are so many uncertain fundamental and technical drivers for the price action. The upcoming trading week will be busy due to a whole pack of periodic important macroeconomic data with headlines of Services and Manufacturing PMI in several regions, Gross Domestic Product reports in Australia, European Union and Japan, labour market updates in the United States and Canada. Three major central banks will meet for interest rates decisions and economic statements: Reserve Bank of Australia, Bank of Canada and European Central Bank. Besides those heavy-weight market players, several major central banks officials will host press conferences, talking about the monetary policy prospects: the Bank of England’s Carney and the Bank of Japan’s Harada. Global investors and traders will keep monitoring major geopolitical topics such as the US-China trade talks, US-EU automotive import tariffs, the Brexit saga and global economic growth forecasts. Commodity markets will traditionally focus on supply-demand issues as the United States will report crude oil inventories, reflecting the consumption level, while OPEC members will discuss further development of oil production cut. An, of course, traders should not forget about following Donald Trump on Twitter. Who knows, what a surprise could come into US President’s mind?
Monday, March 4.
That all will start with Australian building approvals, housing starts, business inventories and company gross operating profits. All of those reports are crucial for the Bank of Australia before their meeting and rate decision, so higher volatility could be noticed at AUD/USD and AUD/JPY currency pairs during the Asian trading session early Monday. Construction PMI report in the United Kingdom will affect the British Pound, which impressed traders last week with its sustainable rally and the question whether that was a fake breakout or a start of a long-term uptrend is still not obvious for most of the analysts. Fundamental analysis would (or would not) support the Sterling in its attempts to reverse the bear market, especially in GBP/USD and GBP/JPY pairs. In addition, GBP/AUD and GBP/CAD could be also extremely volatile this upcoming week due to the importance of monetary policy updates in all three countries. European PPI and Sentix investor confidence index are not so crucial for EUR/USD except there would be some sharp shifts in the figures. The single European currency would not be so volatile on Monday, staying in the same tight ranges as previously, most probably. US ISM NY business conditions and construction spending will be released in the American session opening, however, the impact for the greenback should be limited too.
Tuesday, March 5.
Tuesday will kick off a series of crucial events for the financial markets this week. The Reserve Bank of Australia will make the interest rates decision and publish the economic statement at 03:30 AM GMT. There are no press conferences scheduled and investors will stick to the text of the statement in order to guess what would be the next moves by the regulator in the nearest future. So far, it’s hard to expect major changes in the RBA monetary policy, as the recent economic data was not strong enough to talk about a rate hike, while a rate cut is not on the table yet. Therefore, many analysts expect the RBA to stay pat on rates and publish a modestly optimistic statement with several cautious points that, if needed, the regulator would be ready to act with supportive measures for the Australian economy. In other words, RBA officials might give markets a sign that a rate cut could happen this year, and that would weigh on the Australian dollar. AUD/USD is vulnerable to further slide, while GBP/AUD and EUR/AUD could gain strength. The European trading session will start with Swiss CPI report, Spanish, Italian, German, French and EU services PMI. A similar data was supportive for the single European currency last week, so we could expect EUR/USD appreciating further. British Services PMI would support the pound if the numbers were stronger-than-expected. BoE Carney will also speak on Tuesday, trying to clarify the regulator’s view on strong sterling. US data will include Markit Composite, Non-Manufacturing and Services PMI, as well as New Home sales report for February. The greenback could extend its gains versus commodity currencies of the data was positive. Canadian Ivey PMI will affect USD/CAD which could keep climbing North after an impressive bullish rally last week.
Wednesday, March 6.
Australian GDP will be in focus of currency traders on Wednesday’s Asian session. So far, moderate growth of 0.4% quarter-over-quarter is predicted, while the annual calculation could have worsened in February, adding only 2.6% to the gross domestic product compared to 2.8% growth in the third quarter of 2018. If those figures were able to surprise economists, then AUD/USD could try to recover some losses, otherwise, even more, depth might be on charts. Currency speculators will be listening to the Bank of Japan’s voting member Harada in Tokyo. The Japanese yen was weakening throughout the whole previous trading week, and there are talks that the regulator would be pleased with the market’s reaction on further stimulus to come from BoJ, as weaker yen support local exporters. We could get a confirmation of previous rumours from Harada, and if that confirmed, USD/JPY could chart more gains, testing a range of 113.00/113.50. The European economic calendar is completely empty on Wednesday but there would be an interesting price action in USD/ZAR currency pair. The thing is that South African Rand kept weakening last week on the back of political issues and economic slowdown, therefore, the GDP report should confirm or deny those rumours. It’s tough to predict the exact figure but the only thing to guarantee is volatility. US ADP will release its view on the labour market with Non-Farm Payrolls count. Traditionally, ADP has a different approach for payrolls calculation from the Federal official agencies, however, many traders believe that ADP is always showing the direction of change for the official NFP report, so the greenback could be vulnerable to additional volatility. Canadian Labour Productivity and trade balance reports will be the last data before the BoC meeting and rate decision, so don’t be surprised to see USD/CAD throwing tails and shadows on hourly candlesticks on Wednesday. The Bank of Canada’s rate decision and the statement will be another important event that day. The market consensus is that the regulator will stay pat on rates and the main influence for the Loonie would be from predictions side of things. US Crude oil inventories report will close the busiest day.
Thursday, March 7.
Australian trade balance and retail sales report will influence the Aussie early Thursday, Swiss unemployment rate will be published and the UK Halifax House Price index will be important for Sterling pairs. But the main event of the day is the ECB rate decision and economic statement. Although the market players already do not expect the regulator to look hawkish due to the lack of positive economic data recently. However, the press conference will be important for EUR/USD in the scope of further trend direction. ECB President Draghi is a well-known dove, so it’s hard to expect something positive from him. Nevertheless, if Super Mario told that the tightening is still on the table, then EUR/USD would fly sky-high. Otherwise, we might see the pair testing 1.1200 support again.
Friday, March 8.
Japan will publish the GDP report which is extremely important for the fate of USD/JPY, For now, the average prediction is based on the preliminary reading of -0.5% q/q and -1.9% y/y in the fourth quarter of 2018. But significant revisions might take place. If the figures improved then it would be tough to expect more softness from the Bank of Japan. On the other hand, weaker figures would force the regulator to act and the Japanese yen would keep weakening. The key event of the week is the US NFP report. The greenback would gains strength and US stock indices would soar if the US economy was able to add more than 250 thousand jobs in February. However, such a scenario is less likely than a more moderate figure of 150/180K as the negative impact of the government shutdown could still weigh and have a delayed reaction. Anyway, nervous traders, beginners and small accounts should stay away out of trading terminals as the price action will be wild. Brave traders and people who want to double up their trading accounts would have a brilliant opportunity to do so on Friday.