Past week’s calm sea surface might turn into a terrible storm in the financial markets this upcoming week. Volatility might spike for most of the financial instruments as the economic calendar is getting hotter, even though the trading week will be short due to holidays in major western countries. The main reason is that global central banks’ monetary policy becomes more and more data-dependant as the recent price action showed. Bad news about a possible slowdown in the global economy often come together with unexpected positive surprises, confirming that things aren’t as bad as it was previously anticipated. The brightest example of such a U-turn was seen last Friday when Chinese exports beat the market’s consensus. This week is also full of such events, able to shake the financial world. Even though major Central Banks will not hold meetings this week, macroeconomic reports will be the last ones before a whole series of interest rates decision. Chinese GDP, Industrial Production and Retail Sales - that’s just one day of data to change investors’ sentiment dramatically. British Employment and Inflation, EU CPI, Japanese trade balance, Canadian GDP, US retail sales - this mixture of reports might have a huge impact on sping’s trends for many asset classes including equities, bonds and currencies. Traders should get ready to extremely concentrated trading action.
Monday, April 15.
Monday will kick off the trading week with Swiss Producer Price Index. Although the Swiss Franc was struggling to find a direction versus the US dollar last week, the inflation report might bring a portion of light to further steps by SNB later in April. If the report failed to meet the market’s expectations of 0.2% month-over-month, then currency speculators would sell-off the Swissie against all including Euro and Pound. German Buba Institute Monthy Economic survey might add more optimism to Euro bulls after the ECB rate decision last week. If analysts confirmed the economic recovery, then EUR/USD could continue the Norwards attack. New York Empire State Manufacturing Index will be the critical report in the United States on Monday as investors are still trying to guess US Federal Reserve’s further steps in terms of monetary policy. If the US economy was able to overshadow soft results in the first quarter, then talks about another rate hike will be reinforced and the US dollar would gain strength, as a result. Canadian Business Confidence outlook is also crucial for the Bank of Canada, which decided to have a wait-and-see position before any steps. USD/CAD might be vulnerable ot higher volatility on Monday. British Monetary Policy Committee Member Haskel will speak about the monetary policy conditions, therefore, GBP/USD could find additional support of the BoE official was hawkish.
Tuesday, April 16.
The Reserve Bank of Australia will publish recent meeting minutes, which could have a substantial impact on AUD/USD and AUD/JPY currency pairs. The last ‘unchanged’ verdict came along with an economic statement that caused doubts among investors and traders as the regulator had changed the rhetoric. A rate cut is almost priced in by the market for this year. However, a positive surprise might take place if the RBA was more confident in economic growth. Such a scenario would lift Aussie versus Japanese yen on the back of risk appetite. British Average Hourly Earnings, Claimant Count Change and Unemployment reports could affect Sterling’s surge versus the US dollar on Tuesday. The thing is that the British economy grows much faster than analysts predicted, and the Bank of England could start the tightening cycle much earlier than the regulator officials stated before. German and Eurozone ZEW economic sentiment index might have a similar effect on the EUR/USD currency pair in case if the data was able to beat the market’s consensus. Canadian Foreign Securities Purchase volume and Manufacturing Sales report could be necessary for the Loonie bulls, who seek fundamental background to keep buying the currency. US Industrial and Manufacturing Production will close busy Tuesday.
Wednesday, April 17.
New Zealand inflation should clarify investors’ sentiment in terms of the fear/greed barometer related to the Kiwi exchange rate versus Japanese Yen. So far, strategists predict CPI to grow 1.7% in the first quarter of 2019 compared to 1.9% previously. However, if the data was strong, NZD/JPY could soar. Japan will publish exports, imports and trade balance in March. Rumours about possible slowdown still spread among speculators and the Japanese Yen struggles from heavy selling pressure. But if the data showed that things improved, then the opposite picture might be seen for USD/JPY on Wednesday. One of the most important events for this trading week will take place in China. The second largest world’s economy will report the final reading gross domestic product in the first quarter of 2019. Despite the fact that the previous release was revised down to 1.5% quarter-on-quarter from 1.7%, and the expectations point to 1.4% figure, emerging markets assets and high-risk currencies could gain strength if the report were stronger-than-expected. In addition, Chinese Industrial Production, Retail Sales and Unemployment rate will be released at the same time with the NBS press conference focused on economic prospects and government’s stimulative measures. The market focus will switch to British Inflation data later in the European trading session. UK CPI kept strengthening in February, adding pressure on the Bank of England to hike the interest rates. If March’s result was in line with the expectations, or even stronger, then the British pound would be supported by heavy-volume buying. Eurozone CPI will also be published on Wednesday, but the price action might be less dramatic as EU reports come in traditionally flat. US trade balance will have an impact on the greenback, while the Canadian pack of macroeconomic announcements will influence the price action for USD/CAD. Crude Oil inventories report will affect WTI Crude Price which keeps growing continuously.
Thursday, April 18.
The Australian dollar will appear under the microscope of currency speculators on Thursday as Manufacturing and Services PMI, Employment Change and NAB quarterly Business Confidence will be published during the Asian trading session. The European economic calendar will also be full of crucial events such as German PPI and Services PMI, French Markit Composite PMI and Eurozone Purchase Managers Indexes for the Manufacturing and Services sectors. EUR/USD and EUR/GBP could print an extremely volatile price action as British Retail Sales will be released on Thursday as well. GBP/JPY could chart a sharp whipsaw north if the data were positive for Sterling speculators. On the other side of the Atlantic, equities investors will keep a close eye on US Retail Sales report as that’s one the most critical indicators of consumers’ activity and thus corporate profits in the leading world’s economy. Canadian Core Retail Sales will determine the price action for USD/CAD and lots of Loonie cross-rates. US Purchase Manager Index will be released later on Thursday, adding more volatility for the greenback across the board. Those events will be even more important before the long weekend.
Friday, April 19.
Although the trading volume should fall on Friday due to the vast number of exchanges closed for Good Friday Holiday in many countries, some of the economic reports will be monitored by traders, especially in Asian countries, which will still work. Japanese National Core CPI, Italian Consumer Spending and US Building Permits could affect the price action in thin market conditions.