3 Market Themes You Can Trade Next Week

If you couldn’t get enough of the crazy price action last week, then you’re in for a treat as we kick off a brand spankin’ new trading quarter next week! To start off, here are three market themes that will most likely dominate your newswires:

1. Interest rate decisions of 4 major central banks

Yep, you read it right! Next week the Reserve Bank of Australia (RBA), Bank of England (BOE), European Central Bank (ECB), and the Bank of Japan (BOJ) are all scheduled to release their interest rate decisions.

The RBA will start the ball rolling on Tuesday at 3:30 am GMT. After the RBA dispelled interest rate cut rumors on its last monetary policy minutes, market players are now waiting to see how the central bank will balance global economic growth concerns and the inflationary pressures from Australia‘s booming mining industry.

Interest Rate decisions

On Thursday at 11:00 am GMT the spotlight will turn to the BOE’s Monetary Policy Committee (MPC) Analysts are expecting the BOE’s interest rate to remain at 0.50%, but word around the hood is that the central bank is ready to increase its quantitative easing program by at least 50 billion GBP this month. Has Adam Posen finally convinced enough blokes to join his wolf pack?

At 11:45 am GMT on Thursday the ECB will be the one to take center stage. The report will be closely watched not only because there have been talks of an interest rate cut, but also because the ECB conference at 12:30 pm GMT will be Jean Claude Trichet‘s last interest rate speech as the ECB President. Will he go out with a bang and announce a rate cut, or will he leave the fireworks to Mario Draghi, the next ECB head honcho?

Last, but definitely not the least is the BOJ’s decision set to be revealed on Friday at 12:00 am GMT. The central bank is expected to keep its rates below 0.10% in October, but market geeks are waiting to see if it also plans to inject more money in the markets like it did last month in the wake of a Chuck Norris-like performance of the yen.

2. Developments in the Euro Zone financial crisis

Financial problems in the euro zone have long dominated the markets, and it doesn’t look like next week will be any exception. After Slovenia, Finland, and Germany approved the expansion of the EFSF, traders are now shifting their focus back to Greece.

Many say that the troika (European Union, European Central Bank, and the International Monetary Fund) is expected to release its assessment of the Greek economy next week, which might provide a few answers to the questions about Greece’s next tranche of bailout package. But considering how long the European officials have been sitting on the euro zone‘s debt problem, others aren’t expecting any concrete progress next week. Can the European officials lift the euro with optimistic speeches?

3. U.S. economic reports

While the markets’ attention will most likely stay in the euro zone next week, the U.S. economy has a few shots at stealing the spotlight when its top-tier economic reports are released. Aside from its ISM manufacturing and services PMI reports on Monday at 2:00 pm GMT and Wednesday at 2:00 pm GMT respectively, the U.S. non-farm payrolls (NFP) report will also be released on Friday at 12:30 pm GMT together with the country’s unemployment rate.

Next week traders are expecting the NFP report to show a 50,000 increase in employment after printing a big fat zero in August. We might see increased demand for high-yielding currencies if the report prints better than analysts expected, but if it disappoints significantly, then we might hear more speculations of a QE3 from the Fed AND see another round of risk aversion in markets.

There you have it folks! Are you planning on trading any of these market themes? Whatever you choose, just make sure you practice good trade management, alright? Oh, and if you want to step up your trading skills, why don’t you check out what your fellow forex geeks are planning? Jump in the BabyPips.com community or get updates from my Twitter and Facebook accounts!