The first week of the month is usually loaded with market-moving economic data so let’s dig right in and figure out how we can make forex profits with these events:
1. RBA interest rate decision (Tues, 4:30 am GMT)
With most central banks shifting to a more cautious stance these days, forex market participants are expecting to hear dovish remarks from Reserve Bank of Australia Governor Glenn Stevens and his men this week. Some are even counting on the RBA to cut interest rates, as the recent slump in oil prices has also dragged most commodity prices lower and might’ve wound up hurting Australia’s export revenues.
Even without an actual interest rate cut, any hints on being open to policy easing in the future could wind up hurting the Australian dollar. Just take a look at how the Kiwi reacted when the RBNZ dropped its hawkish stance and talked about the possibility of cutting rates!
2. New Zealand quarterly jobs release (Tues, 10:45 pm GMT)
Speaking of New Zealand, the country will be releasing its Q4 2014 jobs report towards the middle of the trading week. The report could indicate another 0.8% quarterly gain in hiring, probably enough to bring the jobless rate down from 5.4% to 5.3%.
Stronger than expected data could provide the Kiwi a much-needed pause from last week’s slide while weaker than expected jobs figures could lead to an extended selloff. Bear in mind that four out of the last five releases beat expectations so there could be a good chance of seeing an upside surprise.
3. BOE monetary policy statement (Thurs, 1:00 pm GMT)
Another central bank set to make its policy announcement this week is the Bank of England. In their previous statement, BOE policymakers didn’t seem too concerned about the downturn in inflation, as officials even noted that this could spur stronger consumer spending.
However, minutes of their previous meeting reflected less pressure to tighten policy, as hawkish MPC members McCafferty and Weale voted to keep interest rates on hold. Since then, price levels have continued to decline and might be enough to make BOE Governor Carney and his men a tad more worried this time.
The pound’s price action during previous BOE statements suggests that forex traders would rather wait for the minutes of the meeting to be released a couple of weeks later before deciding on their longer-term bias. Still, be ready for any volatile moves among pound pairs if there are any surprises in this week’s BOE announcement.
4. Canadian jobs report (Fri, 2:30 pm GMT)
After posting back-to-back months of job losses, the Canadian economy could show a 5.1K rebound in hiring for its January employment report. However, analysts predict that the oil industry slump could still be taking its toll on hiring, which suggests that a negative surprise is possible.
Significant downward revisions are also expected for the previous releases, as full-time hiring trends have reportedly weakened throughout 2014 and onto the start of this year. With that, the Loonie might be in for another bloodbath if jobs figures come in the red on Friday and lead to speculations of another rate cut from the BOC.
5. U.S. NFP release (Fri, 2:30 pm GMT)
Last but certainly not least is the U.S. non-farm payrolls up for release on Friday’s New York trading session. The economy is expected to have added 231K jobs in January, slightly slower compared to the 252K in hiring gains for December 2014. The jobless rate is expected to hold steady at 5.6% for now.
What’s interesting to note about the U.S. employment report is that the past four releases have all seen upward revisions, indicating that the jobs sector is doing much better than initially anticipated. Add to that the fact that the FOMC is sticking to its hawkish stance and we’ve got a solid possibility of seeing more Greenback rallies!
Which among these major events are you planning on trading this week? Share your thoughts and trade ideas in our comments section or cast your votes in our poll below!