FX Markets Eye BOJ & ECB Meetings, UK & US GDP, US Gov’t Shutdown

Talking Points:

– The Bank of Japan and a European Central Bank both have their Apr routine meetings this week, though traders might wish to rage their expectations forward of time.

– Several GDP readings due out on Friday (UK, US, and Canada), though a intensity US supervision shutdown during 12:01 EDT on Saturday looms large.

– Client positioning has changed extremely after turn one of a French presidential elections – see new changes on a IG Client Sentiment information page.

Join Senior Currency Strategist Christopher Vecchio on Mondays during 7:30 EDT/11:30 GMT for a FX Week Ahead webinar, where we plead tip eventuality risk over a entrance days and strategies for trade FX markets.

04/26 Wednesday | 01:30 GMT | AUD Consumer Price Index (Q1’17)

Consumer cost acceleration is approaching to strike 2.2% in a initial entertain of 2017, adult from a before reading of 1.5%, according to marketplace estimates, and during a reduce finish of a executive bank’s 2-3% target. The RBA’s aim is tangible as a medium-term normal to concede for any secret resources and for lags in a effects of financial policy. Inflation is approaching to be pushed aloft by rising commodity prices boosting domestic income and expenditure. With acceleration levels still low – Q4’16 total were a lowest in 19 years – seductiveness rate hikes are still a approach off, nonetheless some trust that a stream 1.50% money rate will be a low of a stream mercantile cycle.


04/27 Thursday | —: GMT | JPY Bank of Japan Rate Decision

The monthly Bank of Japan Monetary Policy Statement is approaching to see rates sojourn during -0.10% with a 10-year JGB furnish aim unvaried around 0%. In sequence to boost acceleration to a stable, target, turn of 2%, a BOJ controls short-term and long-term seductiveness rates around marketplace intervention, while a executive bank has also committed itself to augmenting a financial bottom until acceleration hits target. At a finish of a month, a executive bank announces that supervision bond issues it will buy in a subsequent month, with guess squeeze amounts and squeeze dates. Consumer cost acceleration in Japan rose 0.3% in Feb 2017, in-line with marketplace expectations and a hold reduce than January’s 0.4%. It’s also value observant that as of a finish of Mar 2017, a BOJ owned approximately 43% of all superb Japanese supervision debt.

Pairs to Watch: EUR/JPY, GBP/JPY, USD/JPY

04/27 Thursday | 11:45/12:30 GMT | EUR European Central Bank Rate Decision Press Conference

The European Central Bank meets this week though a routine assembly is radically a procedural placeholder, given marketplace conditions and events opposite a Euro-Zone. Notably, sandwiched in between rounds one and dual of a French presidential elections, it’s rarely doubtful that a ECB would wish to tip a beam and chuck European markets into panic while Marine Le Pen, a anti-EU/anti-Euro claimant still has a possibility to turn a subsequent boss of France.

Furthermore, and maybe some-more relevant, a Apr assembly is not one of a 4 meetings of a year in that a ECB will furnish new staff mercantile projections (SEPs), dampening a odds of ECB movement even more. One thing to watch out for is a tinge in ECB President Mario Draghi’s press conference, however. After a Mar routine assembly that ECB officials done transparent marketplace participants had a distant too hawkish interpretation of, it’s approaching that Draghi co. atmosphere on a side of dovishness to strengthen their accommodative position by during slightest a finish of 2017.

Pairs to Watch: EUR/GBP, EUR/JPY, EUR/USD

04/28 Friday | 08:30 GMT | GBP Gross Domestic Product (Q1’17)

The initial demeanour during 1Q 2017 GDP is approaching to uncover a UK economy grew 2.3% year-on-year, adult from a before 1.9%. The quarter-on-quarter figure however is approaching to uncover a slack to 0.4% from a before 0.7% as a intensity effects of Brexit start to upsurge by into central figures. The latest sell sales figures, expelled final week and enclosed in 1Q GDP data, posted their largest quarterly tumble in 7 years as consumer reigned in their spending. A multiple of stagnating salary expansion and rising acceleration has crimped consumer expenditure, until recently a expansion motorist in post-Brexit UK.

The rough UK GDP reading is published around 25 days after a finish of a entertain and is formed on 44% of tangible data. The second guess is expelled around 7 and a half weeks after a finish of a entertain and is formed on around 80% of tangible data. The third guess is expelled 90 days after a quarter’s finish and is formed on around 91% of tangible data.

Pairs to Watch: EUR/GBP, GBP/JPY, GBP/USD

04/28 Friday | 12:30 GMT | USD Gross Domestic Product (Q1’17)

Despite a US Dollar descending during a start of a year, annualized US GDP in Q1’17 is approaching to tumble from a before quarter’s expansion rate of +2.1% to +1.1%, thanks to what some impute as “residual seasonality”: given a Global Financial Crisis, US initial entertain mercantile information has been curiously weak, year after year. Nevertheless, there seems to be a pointy order between ‘soft’ and ‘hard’ mercantile data, with certainty readings surging but a co-ordinate benefit in tangible mercantile activity. The Atlanta Fed GDPNow foresee sees final quarter’s expansion during +0.5%. With any emergence of mercantile impulse from a Trump administration looking serve and serve out of reach, ongoing imbecility in US mercantile activity could suppress a Federal Reserve’s best laid skeleton to lift rates dual some-more times in 2017.

Pairs to Watch: DXY Index, EUR/USD, USD/JPY, Gold

04/29 Saturday | 04:01 GMT | USD US Government Continuing Funding Resolution Expires

At 00:01 EDT on Saturday morning in New York/Washington D.C., a US sovereign supervision might be forced to close down after a stability fortitude concluded on in Oct 2015 expires. While it would be rare for a supervision to close down while one celebration controls both chambers of Congress and a White House, such an outcome shouldn’t be discharged out of hand. If US President Trump tries to embody unpopular measures in a spending bill, it’s really probable that it does not make a approach by Congress in time. As was a box in Oct 2013, a US supervision shutdown would import on a US Dollar and US equities alike, lifting direct for a Japanese Yen and Gold in a process. Given a DXY Index’s technical standing, this would be inappropriate timing that could hint a some-more poignant technical breakdown.

Pairs to Watch: DXY Index, EUR/USD, USD/JPY, Gold

Watch a FX Week Ahead webinar deliberating a events listed above.

— Written by Christopher Vecchio, Senior Currency Strategist and Nick Cawley, Market Analyst

To hit Christopher, email him during cvecchio@dailyfx.com.

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