It’s all about central bank speeches and mid-tier reports this week!
This might be a good time to book profits as the quarter comes to a close, unless any of the upcoming catalysts shake things up again.
Don’t forget to review which factors drove forex market price action last week, too.
Major Economic Events:
FOMC members’ speeches (all week) – There’s no shortage of testimonies among Fed voting members throughout the week, leaving dollar traders to react to more clues on tapering and tightening.
Today we have FOMC members Evans, Williams and Brainard talking mostly about their economic outlook in various events, followed by FOMC member Bostic on Tuesday.
Fed head Powell himself will be participating in a virtual panel discussion on monetary policy at the ECB Forum on Central Banking on Wednesday.Later in the week, Evans, Williams and Bostic have another round of speeches lined up and will most likely reiterate their remarks from earlier on.
U.S. durable goods orders (Sept. 27, 12:30 pm GMT) – Uncle Sam will be printing the numbers on manufacturers’ purchase orders, which is considered a leading indicator of production.
For the month of August, headline durable goods orders could recover by 0.7% after the earlier 0.1% dip. The core version of the report might reflect a slowdown from 0.8% to 0.5%.
Australia’s retail sales (Sept. 28, 1:30 am GMT) – Another sharp decline in consumer spending is eyed for the Land Down Under, as recent lockdowns likely took their toll.
Retail sales likely slumped by 2.5% in August, slightly slower than the earlier 2.7% tumble. Still, this would mark the fifth consecutive monthly decline in consumer spending, which can’t be good for overall growth and rate hike prospects.
U.S. core PCE price index (Oct. 1, 12:30 pm GMT) – The Fed’s preferred measure of inflation is up for release, and this might provide more clues on future policy changes.
After rising by 0.3% in July, the reading is slated to show a slightly slower 0.2% pickup in price pressures. A stronger than expected figure, however, might convince market watchers that the Fed could start tightening by mid-2022.
Forex Setup of the Week: CAD/JPY
Who’s up for a reversal?
I’m seeing a double bottom pattern on the 4-hour time frame of CAD/JPY, and the pair is closing in on its neckline resistance.A break above this level could set off a climb that’s the same height as the chart formation, which spans around 270 pips.
However, technical indicators are hinting that the ceiling is more likely to hold than to break. The 100 SMA is below the 200 SMA to reflect bearish pressure while Stochastic is indicating exhaustion among buyers.
If resistance around 87.70 holds, the pair could slump back to the lows around the 85.00 major psychological mark.
Then again, CAD/JPY has climbed above the moving averages, so these could hold as dynamic support moving forward.
The Loonie might have to take its cues from crude oil price action, which is looking pretty bullish recently, while the yen could get pushed around by good ol’ risk sentiment.