After Central Bankers, Economic Data-Points Are in the Limelight Again

This guest article was written by Ashwin Peswani who is the Regional Director of . 

Having received a stronger dossier from the Bank of Japan and US Federal Reserve last week, which dragged the US dollar down and triggered JPY momentum on both sides, this week’s economic calendar is a bit heavier, and could continue propelling forex moves.

The EUR remained up on a weekly basis with upbeat composite PMIs while GBP remained weaker as the latest communications from the BOE indicated more pessimism and uncertainty among the central bank’s policy makers.

Further, the AUD and CAD maintained their upward moves on stronger commodity prices while the NZD failed to reflect the same as RBNZ favored further monetary easing. Moreover, crude prices managed to print a weekly positive closing due to weaker US inventories but traders are cautious ahead of this week’s meeting of global oil producers in Algeria.

Moving forward, Monday started the moves with continued crude price advances as the Algerian energy minister indicated more chances of a successful oil-production freeze talks. The US dollar remained depressed ahead of the first round of the US presidential debate. The EUR remained on the upside because of expectations that German IFO Business Climate might maintain the recent upwards moves of EU details, while GBP kept declining and JPY witnessed continued safe-haven demand support.

The US presidential run is between two candidates that prefer a weaker USD. Trump is considered to be more harmful for the greenback and a successful debate for him could lead to an extended downside of the US currency for the day.

Apart from today, when there are no major details scheduled for release, US Housing, Durable Goods Orders, Consumer Confidence, GDP and Chicago PMI are likely to offer market liquidity to traders while UK GDP, Japanese Inflation and headline PMIs from China are some other important details to observe during the week.

Looking at the broader view, FOMC-triggered pessimism is likely to fade if the scheduled data-points match their upbeat forecasts while a dip in UK GDP, which is less expected, could make the GBP vulnerable for a plunge. Further, failed talks in Algeria could set the tone of a commodity prices dip, which in turn may set the AUD, NZD and CAD for noticeable downsides.

At the technical front, EUR/USD again bounced off from the 200 day SMA and could revisit the 1.1300 multiple resistance-zone with a dip below 1.1180 indicating chances for a 1.1030 comeback while GBP/USD seems all set to test the 1.2800 mark with 1.3130-40 being a resistance point to observe. For USD/JPY, the 100.00 and 99.50 are likely important supports while a clear break of 101.70 could trigger its upside to 102.30. The AUD/USD and NZD/USD are strong unless they break their respective supports of 0.7480 and 0.7150, with 0.7760 & 0.7370 being resistances to watch.