We are in the middle of this trading week in the forex market and today the economic calendar is very rich, full of important economic events, with the main one being the Fed Interest Rate Decision. There are also very important economic data related to the economies of Germany, Eurozone, Canada, Australia and Canada. All this economic data can move the forex market and mainly the Euro, Australian Dollar, Canadian Dollar and US Dollar.
Moderate to high volatility is expected today for the mentioned currencies, and as always economic surprises can add further momentum in the forex market. It is interesting to monitor the US Dollar, which has paused its recent intense sell-off especially during the previous week with the statements during World Economic Forum at Davos. The FOMC rate decision, and the non-farm payrolls on Friday 2nd February 2018 will be probably crucial for the trend of US Dollar, at least in the short-term.
These are the main economic events for today in the forex market to focus on:
European Session
- Germany Retail Sales, Switzerland UBS Consumption Indicator, Germany Unemployment Claims Rate and Unemployment Change
Time: 07:00 GMT, 08:55 GMT
The first important fundamental economic data which can move the Euro today will be the release of unemployment rate and retail sales in Germany. Higher readings for retail sales and lower figures for unemployment rate signal a robust economy, and are considered positive for the Euro.
The forecasts will show a mixed overall picture for the economy of Germany, with an expected decline in retail sales both on a monthly and a yearly basis, but at the same time the seasonal adjusted unemployment rate is expected to decline, having a figure of 5.4% lower than the previous figure of 5.5%. Also higher than expected readings for the Swiss UBS Consumption Indicator are considered positive for the Swiss Franc, reflecting rising consumer spending, leading to higher economic growth measured by the GDP level.
- Eurozone CPI Core and CPI Estimate
Time: 10:00 GMT
The key measurement of the inflation rate in the Eurozone, the Consumer Price Index is expected to show an increase for the Core Consumer Price Index which excludes the volatile price changes of energy and food and a reading of 1.0% on an annual basis, higher than the previous reading of 0.9%, but the estimate for the Consumer Price Index is for a marginal decline and a reading of 1.3%, lower than the previous reading of 1.4%.
These readings will signal that inflationary pressures in the Eurozone are very low, and in essence the ECB has not any real incentive to raise the key interest rate to fight inflation and control economic expansion. In general these readings are considered neutral to negative for the Euro, and until inflation starts to really increase significantly towards the target rate of 2.0% set by the ECB, the chances of any monetary policy change are very low at the moment.
American Session
- US ADP Employment Change, Canada Gross Domestic Product, Chicago Purchasing Manager Index
Time: 13:15 GMT, 13:30 GMT, 14:45 GMT
Higher than expected or rising figures for the private sector employment change and the Chicago Purchasing Manager Index, will be positive for the US Dollar, reflecting a strong labor market and expansion for the business conditions at the area of Chicago. Also rising figures for the Gross Domestic Product growth rate in Canada will be positive for the Canadian Dollar, which can also be influenced later on by the US Crude Oil Inventories. The forecast is for an unchanged reading of 3.4% for the annual GDP growth rate in Canada.
- US Pending Home Sales, US Crude Oil Inventories, FOMC Rate Decision
Time: 15:00 GMT, 15:30 GMT, 19:00 GMT
Rising Home Sales will be supportive for the US Dollar signaling a robust housing market and economic surprises for the US Crude Oil Inventories can add further volatility for the USD/CAD pair. But the most important economic event for the day is the FOMC Rate Decision. Although the forecast is for an unchanged key interest rate, the statements on the future path of interest rates and the economic conditions can influence significantly the US Dollar.
Pacific Session
- Australia Consumer Prices Index, AiG Performance of Manufacturing Index
Time: 00:30 GMT, 22:30 GMT
The inflation rate in Australia is expected to increase on a yearly basis with a reading of 2.0%, higher than the previous reading of 1.8%. This will signal the existence of inflationary pressures in the economy and is positive for the Australian Dollar, increasing the odds of a future tighter monetary policy by the Reserve Bank of Australia. Also an increased reading for the Manufacturing Index will be supportive for the Australian Dollar signaling a strong manufacturing sector.
Asian Session
- Japan Consumer Confidence Index, Housing Starts, Construction Orders
Time: 05:00 GMT
Higher than expected or increased figures for consumer confidence index and housing starts, construction orders will be positive for the Japanese economy and Japanese Yen, signaling higher optimism and possibly increased consumer spending and higher economic growth, plus a robust economy. The forecast is for an increase of the consumer confidence index, with a reading of 44.9, higher than the previous reading of 44.7.
