A very rich economic calendar in the forex market can offer numerous trading opportunities and new or continuation trends as the fundamental events will determine the underlying strength of the Euro, British Pound and the recent weakness of the US Dollar. High volatility is expected for the EUR/USD, USD/JPY, GBP/USD and USD/CAD currency pairs, with the most important event of the day being the ECB interest rate decision. The Euro has been appreciated so far in 2018 against the US Dollar, and the forex market is waiting the important monetary decision by the ECB to weigh on future economic prospects and changes of the quantitative easing program.
These are the main economic events for today to focus on:
European Session
- Germany GfK Consumer Confidence, Spain Unemployment Rate, Germany IFO Conditions, Expectations and Business Climate
Time: 07:00 GMT, 08:00 GMT, 09:00 GMT
The recent rally of the Euro especially against the US Dollar can be tested today, if there are any significant surprises in the readings. The consumer confidence in Germany is expected to remain unchanged with a reading of 10.8, the unemployment rate in Spain is expected to decline to 16.15%, lower than the previous reading of 16.38%, which is positive for the economy of Spain and the Euro, but marginal declines are expected for the majority of the figures of the IFO Institute related to the economy of Germany and its current and future economic conditions. Any negative surprise could possible lead to a sell-off for the Euro, as later on there is the anticipated ECB interest rate decision. Nevertheless, marginal declines for the IFO Institute readings signal a robust economy in Germany, so the effects on the Euro may be minimal.
- Norges Bank Interest Rate Decision
Time: 09:00 GMT
The Norges Bank is expected to keep its monetary policy unchanged with interest rates at 0.5% record lows. This should have little effect on the Norwegian Krone as it a neutral fundamental event.
- UK BBA Mortgage Approvals and ECB Interest Rate Decision, Russia Unemployment Rate, Russia Unemployment Rate, World Economic Forum Annual Meeting
Time: 09:30 GMT, 10:00 GMT, 12:45 GMT, 13:00 GMT, 13:30 GMT
The ECB is expected to keep the interest rate decision unchanged and keep the benchmark interest rate at 0.0%, but later on there is the press conference and it can move significant the Euro with any statements confirming an imminent monetary policy and quantitative program changes in the future. The mortgage approvals in the UK are expected to show an increase, which should be positive for the British Pound, reflecting a robust housing market, while the unemployment rate in Russia is expected to increase to 5.2%, higher than the previous reading of 5.1%.
This is a negative fundamental factor for the Russian Ruble, as a lower value of the unemployment rate reflects a strong labor market, adding to consumer spending, economic growth and the possibility of a rate hike by the central bank of Russia. Also comments from government or central bank officials at the World Economic Forum can add extra volatility for several currencies.
American Session
- Canada Retail Sales, US Wholesale Inventories, US New Home Sales and Kansas Fed manufacturing Index
Time: 13:30 GMT, 15:00 GMT, 16:00 GMT
Retail sales indicate consumption and consumer confidence, with increasing number of sales signaling higher consumer confidence and economic growth, plus potential inflationary pressures as well. Higher than expected or rising figures are considered positive for the economy and the local currency. The forecast for the monthly retail sales in Canada is for a decline and a reading of 0.7%, lower than the previous reading of 1.5%. Higher than expected or rising readings for the wholesale inventories in US indicate a slower economic growth and a weaker demand for manufactured products, and lower consumer spending, being negative for the US Dollar.
The forecast however is for a decline of the US wholesale inventories, which should be supportive for the US Dollar, but at the same time a forecast for a large decline related to the monthly US new home sales is negative for the US Dollar, indicating a temporary weakness in the housing market. Later on a rising figure for the manufacturing activity in the Tenth District of US should be positive for the US Dollar.
Asian Session
- Japan Core Inflation Rate YoY, Tokyo Core CPI, Tokyo CPI, Inflation Rate, BoJ Monetary Policy Meeting Minutes
Time: 23:30 GMT, 23:50 GMT
The recent Japanese Yen appreciation against the US Dollar could continue, or pause and maybe reverse if the inflation rate actual readings increase, signaling that inflationary pressures are existent in the economy. The forecasts are indeed for a yearly increase in the inflation rate in Japan with a reading of 1.1%, higher than the previous reading of 0.6% and this should be positive for the Japanese Yen, but the minutes from the BoJ monetary policy can also prove significant to move the Japanese Yen, as they will provide information on future interest rate paths and economic conditions, inflation rate and economic growth.
