The main economic event today in the forex market is the monetary policy decision by the Bank of Canada, which is expected to raise the benchmark interest rate by 25 basis points, from 1.0% to 1.25%. Moderate to high volatility is expected for the USD/CAD currency pair. There is also important economic data related to the economies of the Eurozone, the US and Australia, so moderate to high price action and volatility is expected also for the EUR/USD and AUD/USD currency pairs.
These are the main economic events for today in the forex market:
European Session
- Eurozone Construction Output, Inflation Rate Final, Core Inflation Rate, BoE Saunders Speech, Russia Balance of Trade
Time: 10:00 GMT, 11:45 GMT, 13:00 GMT
Higher than expected or rising readings for the construction output and the inflation rate are positive and supportive for the Euro, reflecting a strong construction sector and inflationary pressures. Although the ECB has mentioned that most probably there will not be any interest rate increases in 2018, this could change if persistent and growing inflation rate over the 2% key level set as target is evident in the broader economy.
The forecast is for an increase of the inflation rate in the Eurozone on a monthly basis to 0.4%, up from the previous reading of 0.1%, but on a yearly basis the inflation rate is expected to decline marginally to 1.4%, lower than the previous reading of 1.5%, while the core inflation rate, a more conservative measure of inflation is expected to remain unchanged at 0.9%. The balance of trade for the Russia is expected to show an increase in the trade surplus, which is considered positive for the economy of Russia and Russian Ruble, signaling capital inflows in the country, higher exports than imports, which can lead to the appreciation of the local currency over time.
American Session
- US Industrial Production, NAHB Housing Market Index
Time: 14:15 GMT, 15:00 GMT
Industrial production is an important economic and fundamental indicator about the state of the economy. Higher than expected readings are considered positive for the US Dollar and the US economy, reflecting growth in the industrial production, but can also mean inflationary pressures, as higher industrial production can lead to higher consumer and business spending, increasing the costs of goods and services.
On a monthly basis the forecast is for an increase of the industrial production with a reading of 0.4%, higher than the previous reading of 0.2%. NAHB Housing Market Index is a monthly Index released by The National Association of Home Builders (NAHB), which measures the level of home sales. Higher than expected reading are positive for the US dollar reflecting a strong housing market and a positive future economic outlook. The forecast is for the index to decline marginally with a reading of 72, lower than the previous reading of 74.
- BoC Monetary Policy Report and Interest Rate Decision, BoC Press Conference
Time: 15:00 GMT, 16:15 GMT
An anticipated interest rate increase should be positive for the Canadian Dollar, and lead to its appreciation against other currencies. High volatility is expected for the Canadian Dollar and extreme caution, as the well-known buy the rumor sell the fact trading common fact may occur. In general from a long-term perspective the anticipated increase of the benchmark interest rate is a positive fundamental factor for the Canadian Dollar.
- US Fed Beige Book, Fed Evans Speech, Fed Kaplan Speech, Foreign Bond Investment, Net Long-Term Tic Flows, Overall Net Capital Flows, API Crude Oil Stock Change, Fed Mester Speech
Time: 19:00 GMT, 20:00 GMT, 20:15 GMT, 21:00 GMT, 21:30 GMT
Net Treasury International Capital Flows include all net foreign acquisitions of short and long-term securities, as well as banking flows. The metric demonstrates nearly all the flows into and out of the national economy. An inflow of money into the country will most certainly signify growth prospect. Higher than expected capital flows are positive for the US Dollar signaling that the US denominated financial assets are considered attractive and suggesting US Dollar optimism.
The Fed Beige Book can also influence the US Dollar as it provides important information on current economic conditions. The American Petroleum Institute report is important as an indicator of the US petroleum demand, and can move the crude oil prices. For example if the increase in crude inventories is more than expected, then this implies weaker demand and is considered negative for crude prices.
Pacific Session
- Australia Home Loans, Investment Lending for Homes, Westpac Consumer Confidence Index
Time: 00:30 GMT, 23:30 GMT
The Consumer Confidence index tracks the consumers’ insights regarding financial conditions, future state of economic and buying conditions. Higher than expected or rising figures are positive for the Australian Dollar as they signal increased confidence and probably higher consumer spending, which leads to higher economic growth. Also a rising number of home loans and investment lending for homes, signal a robust housing market, which is an important indicator of the stat of the economy.
Home loans are expected to decline on a monthly basis, a negative factor. However a positive surprise reading for the consumer confidence has the potential to move the Australian Dollar causing its appreciation versus other currencies, while a negative surprise may cause selling pressure for the Australian Dollar.
