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 Interest Rate Decision (Nov. 7, 3:30 am GMT)
First among the central bank announcements on this week’s docket is that of the Reserve Bank of Australia. Governor Stevens and his fellow policymakers are widely expected to sit on their hands and keep rates unchanged at 1.50%, but that doesn’t mean this decision would be a non-event.
Note that the RBA is one of the less hawkish central banks out there, so any shift in their bias would still be noteworthy.
The latest batch of reports from the Land Down Under have printed mixed results, with retail sales falling flat and trade activity showing a pickup in exports. Inflation and wages, however, remain subdued and consumer debt is elevated.
Testimonies from Draghi, Poloz, and Yellen (Nov. 8)
Central bankers look set to hog the spotlight for the first half of this week as there are testimonies from ECB head Draghi, BOC Governor Poloz, and Fed Chairperson Yellen scheduled throughout the day.
We’ve already heard from these central banks fairly recently, but market watchers could still be scouring for more monetary policy clues in these upcoming speeches.
Recall that the ECB just announced the start of their asset purchases taper, but this was perceived as less upbeat than expected. Meanwhile, the BOC has been signaling a shift to a more cautious stance from here. Yellen’s testimony isn’t expected to rock the markets as much as it used to since Trump is already set to replace her with Powell when her term expires next year.
RBNZ Interest Rate Decision (Nov. 8, 8:00 pm GMT)
The RBNZ will have its turn in the spotlight by mid-week as it announces its policy decision. No actual rate changes are expected as well, with interest rates likely to stay at 1.75%.
What makes this particular rate decision a tad more interesting is that it will be led by Interim RBNZ Governor Grant Spencer under the new Labour-led government. Note that newly-installed Prime Minister Jacinda Ardern has been pushing for changes in the way the central bank runs things through a modification to the Reserve Bank Act.
Apart from that, traders are also on the lookout for adjustments in the central bank’s inflation estimates to account for the weaker Kiwi. But if policymakers keep their jawboning remarks in their spiel, market watchers could push their rate hike expectations further back.
RBA Quarterly Monetary Policy Statement (Nov. 10, 12:30 am GMT)
Even though the actual RBA announcement will be over and done with earlier in the week, the quarterly monetary policy statement won’t be out until a couple of days later.
This usually contains more insight on the central bank’s assessment and outlook for the economy and as such, it could set the tone for longer-term AUD price action.
U.S. Senate version of tax plan
This one doesn’t have a specific release schedule just yet because things can get pretty cray over in the Hill, which means that extra vigilance could be needed to ensure that it doesn’t sneak up on ya!Dollar traders appear to have moved on quickly from the downbeat NFP and Trump’s nomination of Powell as next Fed Chairperson as the attention has shifted to tax reform. There have been signs of progress but also some setbacks, such as GOP members voting against their own party’s proposal.
Then again, recall that Republicans were able to eliminate the need to have a supermajority to get tax reform through Senate, which basically suggests fewer headwinds. Of course several revisions are still being made and market watchers are keeping their eyes and ears peeled for the Senate version and its implications for the U.S. economy.
Charts to Watch:
The pair has bounced off a long-term inflection point at the top of its daily ascending channel, so a pullback to the mid-channel area of interest could be due ahead of the RBNZ decision. Another cautious statement or any indication of political uncertainty could lead to a bounce off the 1.8500-1.8600 area while a more upbeat announcement could lead to a drop to the channel support.
This pair is already bouncing off the channel support and might be due for a move back to the resistance around 1.5500-1.5550, depending on how the RBA decision turns out. Keep in mind, however, that bearish momentum from last week’s ECB “dovish taper” might still keep the path of least resistance to the downside if the RBA sounds less downbeat.
USD/JPY has a strong tendency to respect technical signals, which means that this upside triangle breakout could prove to be a potent bullish indicator. Price seems to have completed its pullback and resumed its climb, which could be extended on positive updates related to U.S. tax reform.