Let's look at the news event's we've got lining up this week...
The USD Consumer Price Index (CPI) report is releasing on Tuesday, which measures the change in the average price basket of goods and services by consumers, which can be anything from food, transportation and medical care. Changes in the CPI are used to assess price changes associated with living in the country. It is one of the most used statistics to identify periods of inflation or deflation.
Analysts expect to see very slightly stronger inflationary pressures, with the headline figure expected to be 0.5% and the core reading a 0.2% increase. If the results came out like so, we could see some short-term bullish momentum on the USD. Not a huge difference to make a huge impact, but still some progress is being made.
The Reserve Bank of New Zealand (RBNZ) Monetary Policy Decision meeting is on Wednesday, and it's expected that no actual interest rate changes are due; however, a shift in policy tone may be due.
We don't know what will be said in this meeting, and some say that the central bank will be more hawkish at this conference, given how well New Zealand has done to keep control of the effects of Covid-19 compared to its peers. However, it's also expected that RBNZ policymakers will be maximizing the low interest rates, and possibly citing the dip in economic performance for Q4 2020.
The AUD Employment Report is set to release on Thursday which shows the change in the number of employed people during the previous month. Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity. The number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labour-market conditions.
We're expecting to see employment gains of 35.2k, which is significantly lower than the previous 88.7k, and the unemployment to ever so slightly continue dropping from 5.8% to 5.7%. The numbers are not too significant, however, progress is still progress and therefore, we could see slight strength in the NZD on Thursday.
The USD Retail Sales Report is set to release on Thursday which shows the total value of sales at a retail level. Like we mentioned earlier, consumer spending accounts for a majority of economic activity, and therefore when citizens spend, it is a sign that people have jobs, people are making money, and people are able to spend money for whatever it is they want.
Analysts are expecting to see a 5.3% increase compared to the previous month and the core figure to show a 4.7% increase. An "Actual" greater than the "Forecast" is good for the currency, and therefore if these figures come out like so or better, expect some strength in the USD on Thursday too.
GDP numbers came in lower than expected in the US, marking the third straight drop in economic output. This is usually good news for the stock market indices and gold, however, bond yields continue to hold up above 5.1%. Here are some potential trade setups for both dollar and index longs depending on how the […]
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Last Friday's report showed a significant change in global market sentiment from smart money. What COT signaled has turned ultra-risk-off for traders who have been hoping for Fed fears to subside. This news could spark up worries about higher interest rates for the long term. EdgeFinder Analysis GBPUSD is now a -12 on the EdgeFinder […]
