Central bank action set to drive financial markets this week
Central bank action
During the upcoming trading week, traders and investors will focus on key interest rate decisions from the Bank of Japan, FOMC, and the European Central Bank. Market experts are predicting that the Bank of Japan may offer additional monetary policy easing as Japanese policymakers attempt to assist the Japanese economy. The ECB rate decision may also see the Governing Council offering additional policy stimulus measures to fight the negative economic consequences of the coronavirus.
Other highlights on the economic docket include United States GDP, Consumer Confidence, Personal Spending, Manufacturing, and Inflation numbers. Traders also look to the monthly EU Unemployment rate and key PMI Manufacturing data from the United Kingdom economy.
Monday 27th April, FED Dallas Manufacturing Survey
The FED Dallas Manufacturing Outlook Survey is a monthly survey where the Dallas Federal Reserve asks firms whether output, employment, orders, prices, and other indicators increased, decreased or remained unchanged over the previous month. Based on the responses received, an index is calculated for each indicator. The indexes are calculated subtracting the percentage of respondents reporting a decrease from the percentage reporting an increase.
- The USDCAD pair is only bullish while trading above the 1.3900 level, further upside towards the 1.4290 and 1.4480 resistance levels seems possible.
- If the USDCAD pair trades below the 1.3900 level, sellers are likely to test towards the 1.3770 and 1.3650 support levels.
Tuesday 28th April, Bank of Japan Rate Decision
The BOJ Interest Rate Decision is released by the Bank of Japan and is a consensus between the board members on where to set the rate. The members meet once a month for two days to discuss economic developments inside and outside of the country. Changes in the rate have wide consequences, affecting consumer loans, mortgages, bonds, and the exchange rate of the Japanese yen currency.
- The USDJPY pair is only bullish while trading above the 106.90 level, key resistance is found at the 108.00 and 109.90 levels.
- If the USDJPY pair trades below the 106.90 level, sellers may test towards the 104.50 and 103.00 levels.
Wednesday 29th April, US FOMC rate decision
The Federal Open Market Committee meets eight times per year to decide on United States monetary policy and where to set the nation's interest rate. Rate changes impact interest rates for US consumer loans, bonds, mortgages, and the US dollar exchange rate. The decision of the FOMC policy statement is usually very important, maybe more important than the actual interest rate move made by the central bank, due to it being highly anticipated by market participants. The policy statement includes hints for the future and contains the central banks' collective outlook on the economy.
- The USDCHF pair is only bearish while trading below the 0.9640 level, further losses towards 0.9540 and 0.9330 levels remain possible.
- If the USDCHF pair trades above the 0.9640 level, buyers are likely to test the 0.9850 and 0.9950 resistance levels.
Thursday 30th April, EUR EU Unemployment Rate
The EU Unemployment Rate is released by the Eurostat and represents the number of unemployed workers divided by the total civilian labor force. It is seen as aa leading indicator for the overall health and expansion of the European jobs market. Generally speaking, a decrease of the figure is seen as positive for the euro currency, while an increase is seen as negative for the euro.
- The EURGBP pair is bullish while trading above the 0.9000 level, key resistance is found at the 0.9110 and 0.9150 levels.
- If the EURGBP pair moves below the 0.9000 level, sellers are likely to test towards the 0.8750 and 0.8610 support levels.
Friday 1st May, UK Manufacturing PMI
The Manufacturing Purchasing Managers Index, released by both the Markit Economics and the Chartered Institute of Purchasing and Supply measures the activity level of purchasing managers in the manufacturing sector. A reading above 50 indicates expansion in the sector and below 50 indicates contraction. The Manufacturing PMI is based on a survey of purchasing managers in the manufacturing sector.
- The GBPUSD pair is bullish while trading above the 1.2330 level, key resistance is found at the 1.2450 and 1.2650 levels.
- If the GBPUSD pair moves below the 1.2330 level, sellers are likely to test towards the 1.2200 and 1.2160 support levels. xx