The main economic event today it’s the ECB Interest Rate Decision, with the potential to move the Euro not only on the outcome of the decision, but mainly with the perception of the statements made by the ECB by forex market participants and the probabilities of a future easing bias in the quantitative program. There is also economic data related to the economies of Germany, Switzerland, Australia, and Canada. The recent Trade War Fears that are present in the forex market and favor the safe haven currencies such as the Japanese Yen and the Swiss Franc, is an important factor that for now is mainly a psychological factor rather than a fundamental factor. High volatility is expected for the Euro today.
These are the main economic events for today in the forex market to focus on:
European Session
- Switzerland Unemployment Rate, Germany Factory Orders, ECB Interest Rate Decision, Russia Foreign Exchange Reserves, ECB Press Conference
Time: 06:45 GMT, 07:00 GMT, 12:45 GMT, 13:00 GMT, 13:30 GMT
The most important economic event of the day is the ECB Interest Rate Decision. The forex market will focus on the statements made by the ECB related to the quantitative easing program and its potential change in duration, as the expectation is for the ECB to leave the key interest rate unchanged at 0.0%. Also statements on the inflation and the economy can move significantly the Euro. As seen from the chart the key interest rate in the Eurozone is set at 0.0% and has been in a downtrend as of 2008.
This statistic shows the fluctuation of fixed rate interest rates set by the European Central Bank (ECB) as of January 2018. The ECB set the interest rate at 0 percent on 16th March 2016. The ECB has stated that most probably there will be no changes in its monetary policy related to interest rates, but potential changes in the duration of its quantitative easing program may prove to be either supportive or negative for the value of the Euro versus other major currencies. Higher than expected Factory Orders and lower than expected Unemployment Rate will be positive for the Euro and the Swiss France accordingly.
The forecasts are for a decline in the Factory Orders in Germany with a reading of -1.6%, lower than the previous reading of 3.8% on a monthly basis, while the Unemployment Rate in Switzerland is expected to increase marginally at 3.4%, higher than the previous reading of 3.3%. Lower Unemployment Rates indicate a robust economy with a strong labor market and probably higher future economic growth in the future. Factory Orders are an important indicator about the state of the manufacturing sector and prolonged declines in the figures may be an early signal of a future economic contraction in the economy.
American Session
- Canada Housing Starts, New Housing Price Index, BoC Lane Speech
Time: 13:15 GMT, 13:30 GMT, 20:50 GMT
Higher than expected or rising figures for the Housing Starts reflect increased strength related to the Canada’s construction sector and housing market. In general a high Housing Starts figure may forecast strong future economic growth. The housing market is a leading indicator of the broader economy. Also higher readings for the New Housing Price Index will be positive for the Canadian Dollar reflecting increased demand for new houses and a healthy housing market.
The forecast for the Housing Starts is for a reading of 215.8K, a small decline compared with the previous figure of 216.2K. From the chart we notice that the trend of Housing Starts in Canada for the past few months is rather stable, with the exception of the large increase during November of 2017.
Pacific Session
- Australia Balance of Trade
Time: 00:30 GMT
A surplus for the Balance of Trade is considered positive for the Australian Dollar signaling capital inflows to the economy of Australia and increased demand for goods and services denominated in the local currency. The forecast is for a deficit of -1.1 Billion Australian Dollars, lower than the previous deficit of -1.358 Billion Australian Dollars, which should be supportive for the Australian Dollar.
Asian Session
- Japan Household Spending
Time: 23:30 GMT
The forecast is for a figure of -0.7% on a monthly basis lower than the previous figure of -0.1%. Increased Household Spending is considered positive for the local economy and the Japanese Yen as it is correlated with consumer spending, which can lead to higher economic growth measured by the GDP.
