Foreign Exchange Market Volatility Remains Low (Weekly Review)

Last week data on Eurozone consumer inflation could not impress the euro bulls and give them at least some reason to hope for an increase in the European Central Bank interest rate in the foreseeable future. Thus, their attempts to develop an upward correction paired with the US dollar were ineffectual, so the probability of breaking through the 12th figure remains high.

The British pound also looks vulnerable. The news of progress in the negotiations of the British Prime Minister Theresa May with the opposition leader did not have a lasting positive effect on the dynamics of the British pound. Time limits of the UK exit from the European Union, indicated by Brussels, are inexorably approaching, and the deal has not yet been approved by the British Parliament, and in the face of uncertainty around Brexit there is no longer anyone willing to risk opening long positions on the GBP. It will continue to be dependent on the news, and it’s better to just watch its throwing in different directions.

In general, activity of participants in the foreign exchange market, along with the market volatility, remains extremely low. In addition to the European Central Bank, the Bank of Japan, together with the Swiss National Bank, continues to adhere to ultra-soft policies. Under these conditions, as well as along with a steady rise in stock markets, any surge in volatility is unlikely to be expected in the short term, and the current week may also be accompanied by sluggish and boring fluctuations of major currency pairs, while moderate demand for the USD may continue.

Schedule for this week:

Monday, April 8
12:15 GMT - Canada. Housing Starts;
14:00 GMT - USA. Factory Orders.

Tuesday, April 9
01:30 GMT - Australia. Home Loans;
01:30 GMT - Australia. Investment Loans for New Homes;
05:45 GMT - Switzerland. Unemployment Rate;
12:55 GMT – USA. Redbook Index.

Wednesday, April 10
23:50 GMT - Japan. Machinery Orders;
00:30 GMT - Australia. Westpac Consumer Sentiment;
02:30 GMT - Australia. Reserve Bank of Australia Assistant Governor Debelle Speaks;
06:15 GMT - Japan. Bank of Japan Governor Kuroda Speaks;
08:30 GMT – United Kingdom. GDP (MoM) (Feb);
08:30 GMT - United Kingdom. Industrial Production;
08:30 GMT - United Kingdom. Manufacturing Production;
11:45 GMT - Eurozone. ECB Interest Rate Decision;
12:30 GMT - Eurozone. ECB Press Conference and Monetary Policy Statement;
12:30 GMT - USA. Consumer Price Index (CPI);
12:30 GMT - USA. Core Consumer Price Index (CPI);
16:00 GMT - EU. European Union Summit on Brexit;
18:00 GMT - USA. Federal Open Market Committee (FOMC) Meeting Minutes;
18:00 GMT - USA. Budget Balance.

Thursday, April 11
00:00 GMT - Australia. Inflation Expectations;
01:30 GMT - PRC. Consumer Price Index (CPI);
06:00 GMT - Germany. Harmonised Index of Consumer Prices (HICP);
06:00 GMT - Germany. Consumer Price Index (CPI);
12:30 GMT - USA. Initial Jobless Claims.

Friday, April 12
22:45 GMT – New Zealand. Electronic Card Retail Sales;
02:00 GMT - PRC. Trade Balance;
02:00 GMT - PRC. Import/Export;
09:00 GMT - Eurozone. Industrial Production;
14:00 GMT - USA. Michigan Consumer Sentiment.

Author: Anthony Porter, IAFT Analyst