Rates of interest could also be the secret this week as main central banks launch their selections whereas others print extra deets on their earlier bulletins.
ICYMI, I’ve written a fast recap of the market themes that pushed foreign money pairs round final week. Test it!
Which calendar occasions shall be underneath the highlight and what are markets anticipating? Right here’s an inventory:
Main Financial Occasions:
RBA coverage assertion (Apr 5, 4:30 am GMT) – As anticipated, the Reserve Financial institution of Australia (RBA) saved its money price unchanged at a document low of 0.1% for the fifteenth month in a row in March.
RBA named Ukraine as a brand new supply of uncertainty, together with vitality and provide issues. It additionally stated that it gained’t elevate its charges till “precise” inflation stays inside its 2% – 3% vary.
AUD dropped throughout the board and made new intraday lows in opposition to its counterparts earlier than larger commodity costs pushed it larger by the tip of the Asian session.
This week, markets anticipate RBA keep its rates of interest but additionally flip a bit extra hawkish because it considers inflation issues and Australia’s strengthening economic system.
FOMC assembly minutes (Apr 6, 6:00 pm GMT) – Two weeks in the past, Fed members raised their rates of interest for the primary time in three years. Extra importantly, they signaled that there shall be extra to come back AND that they might begin decreasing their stability sheets as quickly as Could.
Since then, some members have hinted at a 50-basis level hike in Could whereas others are solidifying the stability sheet schedule. We’ll know extra from the March assembly minutes scheduled this week.
ECB financial coverage assembly accounts (Apr 7, 11:30 am GMT) – The European Central Financial institution (ECB) turned surprisingly hawkish final month, not solely dropping its hints of taking its charges additional into unfavorable territory but additionally saying that it might finish its Asset Buy Programme (APP) in Q3. Markets had solely priced within the Pandemic Emergency Buy Programme (PEPP) ending in March!
The assembly minutes might present particulars on simply how hawkish ECB members have turned, and provides clues on the central financial institution’s rate of interest hike schedule.
Foreign exchange Setup of the Week: EUR/USD
Euro merchants are in for some motion as we learn the way a lot hawkish ECB members have turned throughout their March assembly.
Before you purchase EUR prefer it’s the most recent airfryer, although, you need to observe that any EUR power in opposition to USD will play in opposition to EUR/USD’s downtrend on the day by day.
Lack of decision in Ukraine would additionally restrict the euro’s positive factors this week. After which there’s the Fed’s assembly minutes, which ought to spotlight the central financial institution’s aggressive tightening schedule and perhaps push USD larger throughout the board.
The pair has room to climb because it flirts with the underside of a month-long uptrend however its positive factors might rapidly discover resistance from a pattern line and 100 SMA ranges on the chart.
Shorter-term merchants can reap the benefits of March’s uptrend and search for purchase alternatives across the 1.1000 ascending channel help.
When you’d fairly commerce EUR/USD’s longer-term downtrend, then you may anticipate EUR/USD to climb nearer to the day by day chart’s resistance zones earlier than executing promote orders.