Start your trading week right by prepping for these top-tier catalysts and checking out my potential trade setup.
Don’t forget to review which factors drove forex market price action last week, too!
Major Economic Events:
New Zealand quarterly CPI (Apr. 20, 11:45 pm GMT) – A slightly faster pace of increase in price pressures is eyed for the first quarter of the year, with the CPI reading slated to climb from 0.5% to 0.8%.A stronger than expected reading might not be enough to boost rate hike hopes, though, as the latest RBNZ announcement revealed that they’re in no rush to tighten anytime soon.
BOC monetary policy decision (Apr. 21, 3:00 pm GMT) – No actual changes to the Canadian central bank’s 0.25% interest rate are eyed.
The previous BOC rate statement was a somewhat optimistic one, so Loonie traders are keen to find out if policymakers retained their upbeat outlook for a recovery later in the year.
Some expect the BOC to start tapering their asset purchases by another 1 billion CAD to just 3 billion CAD per week. The central bank is also set to share more details on the pace of their balance sheet reduction, along with updated economic forecasts.
ECB monetary policy statement (Apr. 22, 12:45 pm GMT) – The ECB is also widely expected to sit on its hands and keep monetary policy unchanged.Recall Lagarde and her fellow policymakers already stepped on the gas with their Pandemic Emergency Purchase Program (PEPP) during the earlier rate decision, so they could stay on cruise control for now.
Since then the region has seen its share of improvements in economic data, but concerns about another wave in COVID-19 cases and some setbacks in vaccination efforts could still weigh on the ECB’s outlook.
European flash PMI readings (Apr. 23, starting 8:15 am GMT) – Germany, France, and the U.K. economy will be printing their PMIs for the manufacturing and services sectors before the end of the week.
After strong improvements in last month’s figures, eurozone PMIs might retreat a bit this April.The French flash manufacturing PMI is expected to dip from 59.3 to 59.0 while its services PMI could fall from 48.2 to 46.6. Germany’s flash manufacturing PMI is slated to drop from 66.6 to 65.8 while its services PMI is expected to slide from 51.5 to 51.1, still reflecting industry growth but at a slower pace.
Meanwhile, the U.K. flash manufacturing PMI could improve slightly from 58.9 to 59.0 while its services PMI could climb from 56.3 to 58.6, both reflecting a stronger pace of industry expansion.
Forex Setup of the Week: GBP/AUD
This looks like a break-and-retest, fellas!
GBP/AUD broke below its ascending channel support recently, indicating that a reversal from the climb is due. Price has since inched close to the broken bottom, which might now hold as resistance.Applying the Fibonacci retracement tool on the drop shows that the 38.2% level is close to the area of interest around the 1.7940 level.
A larger pullback could last until the 50% Fib, which is closer to the 1.8000 major psychological mark. That’s a pretty neat round number yo!
Stochastic still has some room to climb before indicating exhaustion among buyers and turning lower to reflect a return in selling pressure. Moving averages also seem to be attempting a bearish crossover, which could draw more pound bears out.
Once that happens, GBP/AUD could slide back to the swing low or lower. Better keep tabs on U.K. inflation reports and flash PMIs, as well as overall market sentiment!