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Five things to watch on the economic calendar
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Loading...After the last seven days, during which we witnessed three of the most important events of the year, there is one less interesting week ahead. The next five days will be filled with meetings and statements by central bankers.
Here are the five most important events in the coming week and what are our expectations for their impact on the market:
1. Fed decision on the basic interest rate
On Wednesday at 21:00, the Federal Reserve will announce its decision on the interest rate in the country and will publish its latest forecasts for US economic growth. From the Fed, we also look at the dot-pot, from which traders and investors will get important into what is the sentiment among FOMC members.
30 minutes later, Janet Yellen have a speech, which investors will pay close attention and will seek information on the Fed's plan to reduce its balance by $4.5 trillion.
At the upcoming meeting, it is almost certain that interest will be raised. This is most likely driven by market participants and we do not expect the change in interest rates to have a strong impact on the dollar.
At the moment, the Dollar Index is about 97.20, with levels of support and, given the policy of the Federal Reserve, we remain biased toward the dollar. We expect the most appreciation against the euro and the pound, since last week Mario Draghi confirmed that the bank does not intend to change the current monetary policy and the UK is still without a government.
2. Bank Of England's decision for interest rates
The Central Bank of England will announce its decision on the country's key interest rate on Thursday, with the expectation that there will be no change in monetary policy.
This comes after disappointing results in the elections last week. For this reason, BoE will maintain its current monetary policy until the country has stabilized politically and economically.
Considering the political and economic uncertainty caused by Brexit and the election results, we are short on the pounds and we will add new short positions for each retracement. We expect the strongest movement at GBP/USD.
3. Decision of the Bank of Japan on Monetary Policy
Bank Of Japan is expected to keep its current monetary policy at record low interest rates. The base interest rate will remain at -0.1%, and the quantitative easing program will continue to operate at 80 trillion yen per year.
In view of the rising Market, the UK election that has just passed, and James Comey hearing last week, we remain short of the yen, paying close attention and close monitoring of what is happening between Qatar and Saudi Arabia and tensions along North Korea.
4. Swiss National Bank's decision on the basic interest rate
The quarterly monetary policy assessment of the Swiss National Bank is expected on Thursday. Most economists expect the central bank's interest rate to remain unchanged at -0.75%. The central bank is also expected to stick to its engagement if needed to reduce demand for the franc.
5. On Wednesday, we expect China data on industrial production in May.
Market analysts expect factory production to grow by 6.3% last month after rising 6.5% in April. Investors expect the Chinese economy to slow slightly after the better first quarter it noted.
This is likely to affect the currencies directly linked to the Chinese economy, such as AUD and NZD. For worse data than expected, it is likely that we will see a short-term decline in AUD, with the best trading for AUD/USD.
Jr Trader Petar Milanov
Varchev Traders Read more:
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