The week ahead has many a fundamental news 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:

  • Tuesday sees the release of the year on year UK CPI, expected at 1.9%, a significant increase from the previous release. The figure represents the change in the price of goods and services purchased by consumers in the UK and is considered the most important inflation data given that the Bank of England (BOE) uses it as its inflation target. An increase in inflation implies the economy is heating up as consumer begin to spend more money driving prices higher and thus a better than expected release will see the GBP strengthen as trader’s price in the implied effects of economic growth. While a worse than expected release will see the GBP weaken as traders run for cover ahead of a potential cooling of the UK economy.
  • Wednesday sees the focus shift to the USA, where we have a host of releases which will likely impact the US dollar significantly. Along with inflation data we also are on the lookout for the month on month change in Retail Sales, expected at 0.1%, a significant drop from last month’s print of 0.6%. The figure is the earliest data on consumer spending and represents the change in the total value of sales at the retail level. Higher spending by consumers bodes well for the economy and a better thane expected release will show that Americans spent more than expected which will see traders buy the USD in anticipation of a follow through effect on the economy as a whole. Worse than expected data will, conversely, see the USD weaken as market price in a worsening US economy.
  • Thursday sees the release of the Building Permits figure out of the USA. The figure represents the annualized number of new residential building permits issued during the previous month which is expected to reach 1.23M. The figure is regarded as a gauge of future construction spending, which has far reaching consequences for the economy at large. A better than expected release is likely to result in a strengthening of the USD as the figure is taken to imply that an uptick in spending is on the horizon. Conversely, a worse than expected release will show a slowdown in building plans by consumers which will weaken the USD as traders’ price in a potential down tick in the economy.

The above are just the tip of the iceberg of the daily events which occur in markets, for daily technical and fundamental analysis please visit: http://www.opteck.com/market-review/fundamental