Today the forex market main economic event will be the monetary interest rate decision by the Fed, with an expectation of an interest rate increase of 0.25% for the key interest rate. While there is other important economic news related to the economies of Germany, UK, and the Eurozone the Fed interest rate decision will most probably set a new trend for the US Dollar for the rest of the remaining year, so high volatility is expected for all US currency pairs.
The forex market has already almost discounted the interest rate increase, but any statements that accompany the decision about the future path of monetary policy and economic growth will be important as well and can influence the US Dollar.
These are the main economic events to focus on today in the forex market:
European Session
- Germany Inflation Rate, Italy Industrial Production
Time: 07:00 GMT, 09:00 GMT
Higher figures for the inflation rate and the industrial production are supportive and positive for the Euro, reflecting inflationary pressures in the largest economy of the Eurozone and higher levels of industrial production in Italy. Both figures are expected to rise.
- UK Unemployment Rate, Claimant Count Change, Average Earnings Including Bonus
Time: 09:30 GMT
Declining or lower than expected figures for the unemployment rate and the claimant count change, and rising ones for the average earnings including bonus are positive for the state of the UK economy and the British Pound. As the claimant count change measures the change in the number of unemployed people in the U.K, a rising figure is indicative of weakness in the labor market, and same applies to the unemployment rate. The forecasts are for a decline reading for the unemployment rate to 4.2%, lower than the previous reading of 4.3%, an increase for the claimant count change reading and an increase for the average earnings including bonus.
- Eurozone Industrial Production, Employment Change
Time: 10:00 GMT
One day before the ECB interest rate decision important macroeconomic fundamental economic data will be released, with the expectation of an increase for the industrial production on a yearly basis with a reading of 3.5%, higher than the previous reading of 3.3% and an unchanged employment change on a monthly basis with a reading of 0.4%. Rising or better than expected figures for both of these macroeconomic factors and economic indicators will be positive for the economy of the Eurozone and the Euro, signaling a robust economy and a strong labor market.
American Session
- US Inflation Rate, Core Inflation Rate, EIA Crude Oil Stocks Change and Gasoline Stocks Change, Fed Interest Rate Decision, FOMC Economic Projections, Fed Press Conference, Fed Brainard Speech
Time: 13:30 GMT, 15;30 GMT, 19:00 GMT, 19:30 GMT, 23:00 GMT
The inflation rate on a yearly basis is expected to rise to 2.2%, higher than the previous figure of 2.0%, while the core inflation which excludes the volatile prices of food and energy prices is expected to remain unchanged to 1.8%. Higher readings will be supportive for the US Dollar, and the US Dollar may appreciate against other currencies as an interest rate increase of 0.25% is widely expected for the key interest rate, setting the lower and upper bounds for the main interest rate to 1.25% and 1.50% respectively, compared to the previous bounds of 1.00% and 1.25%.
The economic projections from the Fed can also influence the US Dollar directly, especially with references to future economic growth, inflation, labor market, productivity and future interest rate path. The crude oil and gasoline stocks change can add increased volatility for the oil prices and the USD/CAD currency pair, in the event of large positive or negative surprises to the actual versus expected figures. For example If there is an increase of the crude oil inventories, which is more than the expectation, then there is weak demand for oil, and this should be interpreted as negative for the oil prices.
Pacific Session
- Australia HIA New Home Sales
Time: 00:00 GMT
The New Home Sales index tracks and measures the number of new single family homes with a committed sale during the month. An increase in home sales implies a growing housing market, which can have positive economic growth for the broader economy, as a strong housing market acts also as a vote of optimism and consumer confidence for the broader economic outlook.