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. Tuesday sees the release of the UK CPI y/y figure, expected to increase to 1.1% from last month’s 0.9%. The figure is considered the UK`s most important inflation figure and looks at the change in the price of goods and services purchased by consumers. Inflation in closely tracked by traders as an increase in inflation leads to increased prices and a potential for an upward revision of interest rates. Therefore, a better than expected print will bode well for the GBP while a worse than expected print will see the GBP depreciate across the board.
2. Wednesday sees the release of this month’s most important data out of the US in the form of the Federal Funds Rate which is expected to be increased to 0.75% from 0.5%. Markets have all but priced in the expected rate hike and should the Fed increase the rates as expected, we would see some strength come into the USD as the last minute adopters jump on board. If the Fed elects to increase rates by more than 0.25%, we would see a more aggressive buy of the USD while if they leave the rates unchanged at 0.5%, we would see a vicious sell off in the USD which would see gold and equities soar.
3. Several months after the infamous Brexit vote, Thursday`s Bank of England (BOE) releases is scheduled to be a volatile one as the BOE has had enough time to better gauge the effects of the Brexit vote, allowing decision makers to take appropriate action. Any cuts to the Official Cash rate, expected unchanged at 0.25%, or an increase in the Asset Purchase Facility beyond the current 435B, would see the GBP sold off aggressively as markets price in a weaker UK economy. Conversely a surprise rate hike or decrease in the Asset Purchase Facility, would result in the GBP turning up sharply as a more resilient UK economy is priced in.
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