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 Bank of Japan (BOJ) draw the attention of investors as we anticipate the release of the BOJ Policy Rate, expected unchanged at 0.1%, and the BOJ Monetary Policy Statement and Press Conference. The BOJ has been actively trying to stimulate the Japanese economy through relentless monetary stimulus in which it has been buying up government bonds in hopes of getting money into the hands of the people so that they may begin spending and stimulating the economy. At the same time devaluing the Japanese yen as a way to increase the competitiveness of Japanese companies in the global spectrum. The releases will either see the JPY weaken further if the BOJ strikes a dovish tone in which it promises more liquidity to markets by way of the printing press. However, should they site the recent strength in the USD and thus natural devaluation of the JPY as enough for now, we would see the JPY firm up.
- Thursday sees the Bank of England (BOE) take centre stage as all eyes turn to the UK as we anticipate the BOE Inflation Report, Official Bank Rate (expected unchanged at 0.25%) and the Monetary Policy Summary. The Inflation Report will show how the UK economy is fairing in the post Brexit environment and with most central banks looking to keep inflation up, a rapid fall may imply that the BOE will have to take action in the form of cutting the Official Bank Rate or increasing its other QE tools which would see the GBP stumble as sellers look to recapture the 1.2000 level against the USD. If, however, the report shows a stabilising level of inflation and the Monetary Policy Summary shows that the UK economy has found its feet and is stabilising, we would see the GBP continue to climb as bulls reach for the 1.3000 level.
- Friday see the release of the US Non-Farm Employment Change (NFP), arguably, the most important figure out of the US for the month, is expected at 172k, a modest jump from last months print of 156k. The Federal Reserve Bank (FED), who make the monetary policy decisions for the USA, watch this figure very closely as it is regarded as an early indicator of health in the jobs markets, with better than expected data implying that employment is improving and that an improvement in the overall economy can be expected as the new jobs see increases spending and confidence by individuals. Worse than expected data has the opposite effect, depreciating the USD as markets price in a drop in consumer spending and confidence.
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: https://www.opteck.com/fundamental-analysis/