25th – 29th January Weekly Outlook

Going into next week, the key focus will be mainly on 3 central banks – the Fed FOMC Statement, RBNZ Rate Statement, and BoJ Monetary Policy Statement.

We believe that the Fed will not further increase its interest rate this coming week. Instead, our focus will be on the tone of Yellen. Any sign of concern from her in regards to the US economy will potentially send the US dollar down.

Similarly for RBNZ, the tone of Wheeler is key to this event. Indication that further rate cut in the future will send the NZD further down as well.

Lastly, BoJ might potentially increase its QE programme. While this risk event will be the highlight for the Japanese Yen, it is also crucial to focus on risk events happening in the financial market. Further uncertainty in the market can in turn strengthen the Yen.

The volatility index (VIX) remains above the Market Risk Level, hovering around the 22.34 level. While 2016 started with a huge shake in the financial market, the VIX seems to indicate that market is finally settling down and stabilising.

OUR DIRECTIONAL BIAS FOR THE WEEK

  • AUD & NZD neutral (a recent shift in risk sentiment) – watch out for AUD CPI and RBNZ Rate Statement
  • CAD neutral (while Oil is still bearish, BoC tone was optimistic in their last statement) – watch out any update in the Oil market.
  • EUR bearish (fundamental of EUR is still weak) – no key risk event next week
  • CHF & JPY neutral (a recent shift in risk sentiment) – watch out for BoJ Monetary Policy Statement
  • GBP bearish (fundamental data on GBP has been weak) – watch out for Prelim GDP
  • USD neutral (while the FED has hike rate, there are still uncertainties in the US economy) – watch out for Fed FOMC meeting

Read our full outlook here: http://www.fxpresearch.com/market-analysis/2016/1/24/24th-january-market-analysis

 

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Kar Yong
About the Author
A self-taught trader, Kar Yong was interviewed in Channel News Asia’s Money Mind Young Investor and featured as Social Guru on eToro social trading platform in 2013. He founded FX Pipsology in 2014, a platform dedicated to people with similar interest in forex trading. At present, Kar Yong is also a teacher and mentor to many. [space height="20"] [social type="facebook"]https://www.facebook.com/fxpipsology[/social] [social type="youtube"]https://www.youtube.com/channel/UCjsEg0JoKjwQF7X7dN8MHkQ[/social]

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