The stage is set this week for groundbreaking Forex action as the Federal Reserve announces its latest monetary policy decision on Wednesday. While it is extremely unlikely we will see a rate hike, we will be looking for clues of a hike in July.
We will also see a wave of market-moving US data releases with Durable Goods and Consumer Confidence on the economic calendar this week. In addition, we will see quarterly earnings reports from roughly 1/3rd of the S&P 500 with headliners in the tech industry. This is significant as dailyfx website explains that “tech is often looked at as a precursor of economic health. If companies forecast trouble ahead, they usually invest less in new technology in order to conserve/hoard cash, so this is usually one of the first places that a bigger-picture slowdown might be seen.”
A Stronger USD?
If we see strength on any of these releases or if the Fed reveals a hawkish attitude, it is not far-fetched to imagine the USD could break its recent bearish behavior. We will be closely watching and adjusting our trading accordingly.
Japanese Yen, Euro
Japan joins the action on Thursday with the Bank of Japan meeting as the market waits to hear whether or not the Japanese power-house of a bank is nearing the limits of monetary stimulus in the wake of an ever-strengthening Japanese Yen. While last Friday’s report that the Bank of Japan may be investigating a negative rate loan scheme served to create a somewhat significant weakness in the Yen, previous attempts to lower the value of the Yen have not held so can we expect the trend to suddenly change overnight? Time will tell and we will be closely watching for changes in the long-term trend.
The Euro-zone doesn’t escape with several high impact events and a release of first-quarter GDP data putting pressure on the ECB.
Trade With Caution
Weeks like this one, jam-packed with central bank action and economic data releases can results in heavier than usual risk for Forex traders, but can also result in more Forex trading opportunities. We advise all Forex traders to proceed carefully and be sure to check your risk management, particularly if you are trading at the same time as a high impact economic release. Please contact us at ForexSignal.com if you have any questions.
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