We got plenty of high impact news scheduled this week, here’s a brief list of tradable releases, for a complete analysis along with Forecast and Previous figures, make sure to visit our Forex Calendar page.
Here’s a brief list (all in US Eastern Standard Time):
- Tue May 16 4:30am UK CPI y/y
- Wed May 17 9:30pm AU Employment Change
- Thu May 18 4:30am UK Retail Sales
- Fri May 19 8:30am US Core Retail Sales
- Fri May 19 8:30am US Core CPI
Important New Developments
North Korea apparently was “successful” in test launching their new ballistic rocket and it’s said that the device is capable of carrying nuclear warheads. This is obviously adding to some geopolitical uncertainly in the region and beyond.
G7 meeting provided the same old communique, although the focus has been on Foreign Exchange FX volatility and that it was bad for growth and G7 members reaffirmed commitment against competitive devaluation.z
RBNZ Assistant Governor McDermott stated that a world of “radical uncertainty” has made forecasting the trajectory of monetary policy difficult; more frequent inflation data would make its job easier, which in essence is stating a possible change in the method they report on inflation, which has not been changed in 30 years… It could make trading CPI a bit more exciting, something us Forex traders should definitely pay close attention.
Saudi Oil Min Al-Falih: Russia and Saudi Arabia in favor of extending OPEC deal for 9-months to March 2018; decision to be made May 25th. This could add further pressure on Crude Oil prices and keep plenty of pressure on the CAD.
Currency Pairs Trading Strategy For The Week
Since this is obviously a very important week for UK, I believe market focus will be on Sterling, especially considering CPI, Retail Sales, and Unemployment Rate data are all scheduled.
Of course, with “Brexit” already being yesterday’s news, market has already started supporting GBP and all we need is a series of positive news events to add “fuel” to the fire. There should still be about 300 ~ 500 pips of upward room for GBPUSD to move until hitting some strong resistance, therefore we could be looking to BUY on dip on the back of positive data this week.
Euro has been trading in a narrow 200 pips band between 1.08 and 1.10. With ECB remaining neutral but inflation recovering, I believe ultimately a long-euro could pay off. Therefore my bias is to buy on dips, especially considering the safety net for EURUSD is around the 1.05 area, which has stopped even some of the most vicious capitulation sells of late.
Japanese Yen has been weakening in a slow but steady manner. With the uncertainty of North Korean in the region, the fact PM Abe’s 3 arrow economic plan somewhat failed to boost Japan, and a strong US economy, I believe we should still buy on dip, especially considering the 112.00 area as point of entry.