Weekly Forex Economic Overview
What happened last week and what hot market moving events are listed in the forex economic calendar this week? Here is a quick overview on Europe, China, Switzerland and upcoming economic events to get your forex week started.
Euro: Clear Easing Signals from ECB
Super Mario also known as European Central Bank president decided to go wild on their Thursday meeting and gave away clear signs that they may be ready to cut their deposit rates and to redesign their quantitative easing (QE) program. On the news, boy oh boy did Mr. Euro fall.
The EUR/USD pair FINALLY broke below a key resistance level of 1.11. This could bring us back to our Euro - US dollar parity outlook I have been publishing about before the whole Chinese thing happened.
China: Surprise Rate Cuts Revived Risk Appetite
We get it, China is in the middle of a slowdown. But what's up with all the surprises? The Chinese central bank decided to throw a surprise party on the forex dance floor in true Chinese manner right before the weekend by announcing several rate cuts. That’s the sixth time they’ve cut interest rates since November last year.
The central bank has said that the cuts are part of normal monetary policy and not the same as quantitative easing. This could mean that there is more to come this week, as the Communist Party is sitting down this week to thrash out the next five year plan. Ahead of the meeting, Premier Li has said that the magic number of 7% GDP was never set in stone and that they shouldn't defend that goal to the death. This could pave the way for a more modest five year plan than many were expecting and hoping for.
However, unlike their last surprise, this time these measure could be a good thing for global economy. The Chinese economy has been in dire need of stimulus for the past few months so it’s no surprise that Asian equities reacted positively to the latest batch of PBOC rate cuts. Besides, most central banks have been blaming the Chinese slowdown for bringing a huge source of uncertainty for their own economies so these easing moves could provide a bit of relief.
For now, commodity currencies such as Mr. Aussie, Kiwi and Loonie seem to be in a better spirit with revived risk appetite.
Swiss central bank to monitor effect of ECB stimulus plan
Ms. Swissy has been under pressure after the ECB easing signals, and Switzerland's central bank has vowed to do something about it. Swiss National Bank's board member Fritz Zurbrügg said in an interview on Monday "At our policy assessment in December we will analyze all developments, both in Switzerland and outside. This, of course, includes an evaluation of the monetary policy measures of the ECB and their possible effects on Switzerland."
The USD/CHF pair has broken above a key resistance of 0.97.
Forex Economic Events Coming Up
On the economic calendar we have the New Zealand trade balance at 10:45 PM GMT on Monday.
Tuesday could be volatile for the GBP/USD pair, since the UK will release their Prelim GDP at 10:30 AM, and US Core Durable Goods Orders and Consumer Confidence will be released at 1:30 and 3 PM GMT respectively.
Wednesday is gonna be huge (Donald Trump style) for commodity currencies from the Southern hemisphere (AUD and NZD) with Aussie CPI scheduled for 1:30 AM and and Reserve Bank of New Zealand rate statement at 9 PM. To top this off, we have the FOMC rate statement at 7 PM, so it could be a wild ride for the NZD/USD pair.