Start your trading prep for the week by plotting these upcoming economic releases and market events on your schedule and checking out these potential plays.
RBA meeting minutes (Dec. 19, 12:30 am GMT)
Aussie bulls seemed pretty pleased with the December RBA statement as policymakers were in a cheery mood this time around. Even though the central bank kept rates unchanged at 1.50% as expected, their official announcement reflected a bit more optimism on mining activity and inflation.
Because of that, market watchers are likely to pay close attention to the transcript of the RBA huddle to glean more tightening clues. Recall that the RBA also refrained from trying to talk down the currency then, but any jawboning remarks might still undo the gains.
New Zealand Q3 GDP (Dec. 20, 9:45 pm GMT)
A nation’s GDP is typically seen as its economic report card, containing a breakdown of its performance per component and also its final grade for the period. For New Zealand, the GDP is expected to show 0.6% growth for Q3 2017, a couple of notches slower compared to the earlier 0.8% expansion.
Still, a higher than expected read could keep traders optimistic about the New Zealand economy and potential RBNZ tightening. On the other hand, weaker than expected results could dampen rate hike hopes for next year, likely keeping a lid on Kiwi rallies.
BOJ policy statement and presser (Dec. 21, Asian session)
Most major central banks already had their say last week, except for the Bank of Japan. Governor Kuroda and his gang of policymakers will be taking center stage later this week as they announce their latest decision.
No actual changes to interest rates and their QQE program are expected, but I wouldn’t leave out any potential surprises or changes in rhetoric. For instance, a more upbeat outlook on inflation could lead traders to think that the Japanese central bank might consider unwinding its stimulus efforts sooner rather than later.
Canadian CPI and retail sales (Dec. 21, 1:30 pm GMT)
On Thursday’s U.S. session, Canada will print its CPI and retail sales figures, providing some data to back up the latest BOC policy announcement. ICYMI, Governor Poloz and his fellow policymakers seemed more cautious about future tightening moves and additional uncertainties surrounding NAFTA.
Weaker than expected readings, therefore, could draw more Loonie bears in and reinforce odds that the BOC could sit on its hands for much longer. Headline CPI posted a meager 0.1% uptick in the previous month while headline retail sales also registered a bleak 0.1% gain.
U.S. tax bill vote
Late last week, the Greenback got a strong boost when Senators and members of the House of Representatives managed to take a few more steps forward in tax reform.
The final vote is expected to take place sometime on Tuesday, and approval would mark the Trump administration’s first major legislative victory. This is widely expected to give a big boost to business and spending activity, which would likely be welcomed by a party in Wall Street.
Charts to Watch:
Dollar strength on Friday allowed the bullish setups to catch some pips before the trading week came to a close. There were some surprises from central banks *cough, ECB and RBNZ, cough* that led to a sharp drop for EUR/NZD, though.
I’m seeing a bit of a descending triangle and what might be a head and shoulders classic reversal pattern on EUR/USD. The triangle support or neckline is around the 1.1725 area, and a break below this could lead to a drop around 250 pips or the same height as the formation.
Stochastic is nearing overbought levels, which means that euro bulls could be exhausted. Also, the less hawkish tone of the ECB and the potential tax bill approval this week could keep this pair’s gains limited.
NZD/USD: DailyThe Greenback could go either way with the tax bill vote coming up, so I’m also watching this make-or-break play on NZD/USD. The Kiwi had a bullish reaction to the new RBNZ head announcement and might be able to sustain its climb if the odds aren’t in the dollar’s favor this week.
For now, the pair is hanging out at an area of interest visible on the daily chart but has also recently dipped below a long-term rising trend line. Climbing back above this support zone could allow the uptrend to resume, but a dollar rally could allow price to make a more convincing break below the .7000 handle.