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The biggest catalysts for this week include consumer spending data from major economies, as well as the FOMC minutes.

What’s expected for these events?

Major Economic Events:

U.K. CPI (Feb. 16, 7:00 am GMT) – After surging from 5.1% to 5.4% in December, the headline CPI is slated to hold steady. The core CPI could still post a small uptick from 4.2% to 4.3% in January.

Stronger than expected U.K. inflation could once again up the pressure on the BOE to tighten policy in order to ward off the threat of stagflation. Keep in mind that the quarterly GDP came in slightly weaker than expected, so the central bank might have to act if price pressures are still too strong.

Canadian CPI (Feb. 16, 1:30 pm GMT) – Canada looks ready to report a rebound in price levels, as the headline CPI is projected to increase by 0.6% after the previous 0.1% dip.

Other versions of the CPI are more or less likely to hold steady, with the median CPI slated to stay at 3.0% and the trimmed CPI to remain at 3.7%.

U.S. retail sales (Feb. 16, 1:30 pm GMT) – Uncle Sam might show quite the comeback in spending for January, with the headline retail sales figure likely to come in at 1.8% versus the earlier 1.9% slide.

The core version of the report could print similar results, recovering by 1.0% after the previous 2.3% drop.

The industrial production report due shortly after the U.S. retail sales might also be worth keeping tabs on, as the figure could show a 0.4% uptick after the earlier 1.0% drop.

FOMC meeting minutes (Feb. 16, 7:00 pm GMT) – The latest Fed decision was a bit of disappointment for hardcore dollar bulls, as policymakers did little to confirm that a rate hike is coming soon.

Many had expected FOMC officials to signal an interest rate increase for March, but it seemed the committee was still being cautious. Some say that these minutes might be outdated since it hadn’t taken last week’s CPI surprise into account.

Australian employment change (Feb. 17, 12:30 am GMT) – After posting an impressive 64.8K gain in hiring for December, the Land Down Under might report a flat reading for last month.

Employment typically slows around this time of the year, but zero hiring gains or losses might still be enough to keep Australia’s jobless rate steady at 4.2% for January. Weaker than expected results, however, might further dampen RBA tightening hopes.

FOMC members’ testimonies – With the FOMC minutes not expected to cause much of a ruckus, dollar traders might tune in to speeches by committee members instead.

FOMC member Bullard, who signaled the possibility of a full rate hike before July, has a speech coming up today (Feb. 14, 4:00 pm GMT) and on Thursday (Feb. 17, 4:00 pm GMT).

FOMC Mester has a testimony scheduled on Thursday as well (Feb. 17, 7:00 pm GMT) while Waller, Williams, and Brainard are due to participate in panel discussions on Friday (Feb. 18, starting 3:45 pm GMT).

Forex Setup of the Week: USD/JPY

USD/JPY 4-hour Forex Chart

USD/JPY 4-hour Forex Chart

Fed rate hike bets could continue fueling the dollar’s rally this week, so I’m looking out for a test of support on this USD/JPY rising wedge.

Where are buyers hanging out?

The pair is already closing in on the bottom of the chart patter, which happens to line up with the 115.00 major psychological level and 61.8% Fib.

Stochastic is still heading lower, though, so the correction could keep going until oversold conditions are met. Besides, the 100 SMA is below the 200 SMA for now, but a bullish moving average crossover seems to be looming.

If the support area holds, USD/JPY could surge right back up to the swing high at 116.34 or the top of the wedge closer to 116.50. A break above this resistance might even be followed by an uptrend that’s the same height as the chart pattern or roughly 400 pips.

Better keep your ears peeled for any more hawkish comments from FOMC members throughout the week, too!