The week ahead has many a fundamental new release to look forward to, events which are sure to have traders licking their lips at the implied volatility and the numerous trading opportunities they create. Let us take a look at our top 3 picks:
1.The Australian CPI q/q, expected at 0.5%, is due on Wednesday and is the primary gauge of consumer prices and how they have changed relative to the last quarter. The figure tends to have a large impact on the Australian dollar and equities as it accounts for a majority of the overall inflation in the economy with a rising/falling inflation signalling that the economy is heating up/cooling down at which point the central bank may opt to increase/ decrease rates in an attempt to maintain its inflation mandate. Prospects of rising interest rates usually result in the appreciation of the respective countries currency and devaluation of the countries equity market while vice versa for a prospect of falling rates.Thursday sees the release of the UK`s Prelim GDP q/q which is expected to post a significant drop to 0.3% compared to the previous print of 0.7% in the wake of Brexit.
2.The GDP figure is the broadest measure of economic activity and the primary gauge of the health of the UK`s economy as it measure the growth of output. This combined with the fact that this is the first in the series of GDP releases in the UK, it is most likely to impact markets significantly. A print that beats the expectation of 0.3% will bode well for the Pound as markets price in the resilience of the UK economy and consequently a print which is less than expected will see the pound being driven lower as the market prices in a worse than anticipated damage to the UK economy, post-Brexit.
3.Friday sees the release of the US Advanced GDP q/q figure which is expected to print a mammoth gain of 2.7% in what seems to be a time of a bounce back of the US economy. The GDP figure is the broadest measure of economic activity and the primary gauge of the health of the US`s economy as it measure the growth of output in the economy. The Advanced release of GDP is the US`s first of a series of GDP releases which makes it the first look and most likely the one to have the biggest impact on the dollar, commodities and equities in the US. A release which beats expectations will see the USD appreciate while commodities and equities depreciate as market anticipate a more hawkish FED while a worse than expected release will see the USD lose ground as commodities and equities appreciate in anticipation of a more dovish FED.