Market News Update
Do you have ants in your trading pants?
Just as we expected, the major theme of last week’s Fed meeting was “patience”.
With some key changes in verbiage we see Yellen and the Fed’s optimistic about a strengthening U.S. economy, but at the same time remaining cautious in their approach.
The markets translated the Fed announcement as being dovish and the USD pairings were priced accordingly.
The other global economies, and thus their currencies, pale in comparison to the growing strength of the USD.
The current stance may be showing dovish, but it appears that the American hawks are hovering above and will be ready to pounce on any new data that may indicate it’s time to raise the rate. So far, we don’t anticipate the hawks being able to pounce on the rate until the middle of this year.
Let’s look at the slew of market news that may impact your binary option and forex currency pairings for the week:
The Aussie (AUD) – If you’ve been trading the Aussie the last couple of week’s, you may have been riding the AUD/USD bears all the way to the bank.
In light of recent developments, the Aussie might be weighing much too heavy on the reliance of the mining industry, China’s output and a property bubble that is a prick or two away from popping.
Pay attention this week, to the Reserve Bank of Australia’s rate statement, cash rate and monetary policy statement.
As the global outlook continues to weaken don’t be surprised if the Aussie’s cut the cash rate.
There are rumblings, within economic circles, that the Aussie is overvalued. Some of those in the circle are also buying into the idea that the Kiwi (NZD) may follow the fate of the Aussie and that further depreciation is on the horizon for both currencies.
The way we see it, is that although the Kiwi is a commodity laden currency, the strength in its export muscle will override global weakness. A continuing demand for their exports will have them treading water while the Aussie looks to be flailing for a life saver.
Perk your ears up for this week’s speech by Reserve Bank of New Zealand‘s Governor Wheeler. The markets for your Kiwi pairings will be on the move as the verbiage is dissected on what direction the reserve bank will take moving forward.
Other major releases this week for the Aussie, besides the RBA’s Rate Statement, Cash Rate and Monetary Policy Statement, include:
Month over month Building Approvals, Trade Balance and month over month Retail Sales.
For the Kiwi (NZD) – Along with the Governor Wheeler’s speech major releases include:
Global Dairy Trade Price Index, quarter over quarter Employment Change and Unemployment Rate.
Onto the Euro we go – Spanish Unemployment Change and month over month German Factory Orders.
With rising tension between euro zone economies, led by the demands of the new political regime in Greece, and its anti-austerity sentiment, the German guard will be clenching their teeth as growth comes to a grinding halt. The possibility of a collapsing euro will have the currency flailing to keep itself from sinking deeper into the abyss.
For the Sterling (GBP) – The release of Manufacturing, Construction and Services PMI, Official Bank Rate and Monetary Policy Committee (MPC) Rate Statement.
The UK appears it will keep the rate steady as the surrounding euro zone continues to be on shaky ground with no signs of solid footing.
The Loonie (CAD) – Trade Balance , month over month Building Permits, Employment Change and Unemployment Rate.
The major release to focus on for your Loonie pairings will be the employment data. Will the plunge in oil prices start to rear its ugly head on the employment numbers? Any sign of weakening employment will have a volatile impact on the Loonie . Remnants of “cheap oil” will weigh heavily on the currency.
For the USD – ISM Manufacturing and NON-Manufacturing PMI, ADP Non-Farm Employment Change, Trade Balance, Unemployment Claims and Unemployment Rate.
With a cautiously optimistic Federal Reserve and a continuing stream of overall positive economic data, it may have the hawks with “ants in their pants” even as patience wears thin in the coming month’s. But for those that hold fast to the strength of the U.S. economy, can look to bolster their accounts with a colony of cash that would make any worker ant happy to make binary options and forex trading their way of life.