Market Analysis For The Current Week
Doing Market analysis every week is very important if you want to be successful in forex trading. Keeping an eye on news and events can help you take right step at the right time. Lets see what coming up this week.
Global events are dominating movements in the money markets this week. But as the dust begins to settle in the US and with the UK finally outlining its position on leaving the EU, the markets should begin to normalise. Below is this week’s news on events affecting the markets.
To learn how to trade major news events and happenings please read our post on how to trade news.
There’s little doubt that the global outlook is having a profound effect on currency markets. Donald Trump’s executive orders are making USD unpredictable, although it is currently holding up well considering. Though it is on a downward trajectory. How this continues is anyone’s guess. But continuing in-fighting of the upper areas of the US government is not going to encourage consumer confidence.
There are also significant and deep worries that Trump seems to lack clear economic policy. Though he has begun to expand on his ideas of repealing laws that were formed against banks after the financial crisis of 2008. This has drawn intense scrutiny from those outside of the banking sector who blame the banks and their practices for the crisis which did extreme damage to world markets.
Though this week there is likely to any interest in USD, as unemployment figures are due to be released. If these are strong then USD could be a good buy. But with huge volatility in USD, any gamble on it is exactly that, a gamble.
Parliament has agreed on the principle of invoking article 50 of the Lisbon treaty in effect giving the green light for the negotiations on Britain’s exit from the European Union to begin. This is likely to provoke volatility in GBP, especially against EUR.
The U.K. is also due to release trade figures later in the week. This will be a good indicator of Britain’s output and is likely to affect GBP. Britain is also in the process of early talks on several trade deals with other countries. Any positive news on these is likely to push the price up as investors are still concerned about the UK’s economic future. There have been early green shoots of hope on this, as Switzerland have announced their intention to broker a trade deal with the UK.
Germany is due to release its trade balance this week. This could be good news on EUR if it continues to have a surplus. Though Britain’s renewed focus on “Brexit” could easily outweigh a good result from the German trade figures.
But any good news could be outweighed by the ongoing uncertainty over the upcoming French election as far-right outsider Marine has been making inroads in the polls, though is still likely to lose. But investors are nervous after “Brexit” and Donald Trump’s election were both against pollsters predictions.
Bank of Japan’s recent attempts at controlling the weak yen has proved somewhat fruitful. The currency has also made gains against the weakening USD and is likely to continue as the US President continues to provoke volatility in the markets.
Japan’s Shinzo Abe is due to meet with US President Donald Trump this week, the talks are sure to address the assertions by Trump that Japan purposefully devalues the yen. The outcome of such meetings could have a positive effect on JPY, as Trump is looking for international friends, he is likely to back down on the attacks on one of America’s biggest trading partners in Asia.
The Swiss finance ministry has announced a deal to exchange tax information with Liechtenstein in order to chase down billions that are hidden there. This may produce a positive result for the currency. Though they have been accused of hypocrisy after years of being known as the country where significant amounts of tax avoiding money has gone to. But Switzerland has clamped down as much as possible on the practices.
The Swiss government have also announced that they’re keen to make a trade deal with the U.K. This is also likely to be good for both currencies as two mature financial markets that complement each other well and have a long trading history.
This week also sees unemployment figures produced for Canada. This will be a test of the government’s ability to add jobs as economic indicators are good.
Weakening oil prices are potentially harmful to the currency at present. Though generally the country is performing well economically and benefitting from instability in the neighbouring US.
The currency is currently holding up well as the country is performing well economically, especially against AUD. Though this week the RBNZ is set to detail its fiscal policy and that is likely to create some movement in the price.
But with good economic data the news is likely to be positive. It could also create some opportunities for trading the expected fluctuations.
To learn more about these currencies and their role please read our article on “What is forex and What is everyone trading?”