Forex News Trading Events For The Week of November 3rd – 7th.

I’ve put together some analysis of this week’s Forex news events, which I hope will give everyone a good understanding of how I’m viewing the market for this week.

This week’s “high impact” news events that I will be looking to trade are as follows;

Monday 3rd November 2014

AUD – Australian Building Approvals – 12:30am

Figures here are forecast to fall notably short of previous levels with the previous reading being 3.0% compared to an expected 0.9%. As we are currently bearish on the AUDUSD you could look to position yourself in the market prior to the event shorting the pair, if figures are expected to be negative they will more than likely come out as negative which will cause a sell off as we are already negative regarding that currency.

CAD – BOC Gov Poloz Speaks 05:50pm

Any commentary from Poloz has the potential to cause market sway at present given that the BoC has recently announced that they are no longer providing forward guidance, meaning they will no longer be giving pointers regarding their plans to raise rates, alter policy etc. Consequently we as traders want to pay close attention to data coming out from the Canadian economy so that we can approximate when the BoC might raise rates we also want to couple that data with any statements made by Poloz to establish what thoughts he might have on their economy and gauge whether or not the BoC are happy to give us a clue as to when a policy change by the BoC might occur.

Tuesday 4th November 2014

AUD – RBA Rate Statement – 03:30am

The commentary coming from the RBA in all probability is going to be negative; in their previous rate statement the RBA omitted any remarks on the AUD/USD in their commentary. We believe that is a deliberate tactic by the RBA to drive the price of the AUD lower, if they do comment on AUD/USD alteration it will remove the element of uncertainty surrounding the pair, traders would begin to speculate that the RBA are growing happy with the shift in price action and that could trigger the market to start buying the currency back. This is the last thing the RBA want; they would like to see the pair trading in between 80-85¢, it’s currently at 88¢ so there is still some way to go for the AUD to fall and the RBA won’t want to change that momentum just yet. Subsequently I expect this statement to be a carbon copy of the last statement which will disappoint the market potentially prompting a further sell off.

NZD – GDT Price Index – Tentative

This is by no means a tradable news event, however considering the broader view encompassing the New Zealand economy there is a compelling argument to observe these data points. Considering that the Dairy trade accounts for 7% of GDP in New Zealand and milk prices have fallen heavily over the past few months, we now have a situation where by the drop of dairy prices has had a knock on effect to inflation in the Australasian economy, with inflation reverting to lesser levels. This has of course eased pressure off of the RBNZ to hike rates, they have subsequently removed any reference to the next phase of rate hikes from their commentary which is naturally more dovish for the NZD. Therefore we as traders just want to pay notice to these GDT figures, if dairy prices do begin to creep up again we can take that as a cue that inflation is going to incline to previous levels thus placing pressure back on the RBNZ to tailor a tightening of policy into their plans going forward.

Wednesday 5th November 2014

JPY – BoJ Gov Kuroda Speaks – 02:30am

We can expect Kuroda to be dovish, I would anticipate commentary along the lines of “we are prepared to do whatever it takes, we will do more if we need to” this will precipitate additional sell-offs for the JPYwith the currency being anfacile selling currency for the coming weeks and months. Whilst the BoJ are pressing on with their QE Programme without reservation we can be sure that the market is going to continue to sell the currency, pairs like USDJPY; every time it dips down we want to be buying the dollar no matter how far it dips as long as those fundamentals are still valid we can be certain that the JPY will continue to devalue.

USD – ADP Non Farm Employment Change – 01:15pm

This data point is a pre-cursor to the primary NFP event (released 7th Nov) this could spark a little bit of a reaction across the markets although historically investors tend to focus on the main event on Friday. Figures are forecast at 214k marginally higher than previous levels the market will be looking for anything over 200K to signify a healthy economy and provide impetus to continue buying the USD.

Thursday 6th November 2014

EUR – ECB Press Conference – 01:30pm

This press conference will provide intimation of the ECB’s perception of their current ABS programme, whether we can expect them to start considering further stimulus in the form of QE. We’re also looking for a measure on how the ECB are tallying the effects of their ABS programme to gauge how realistic an outcome further stimulus is in the near future as part of the central bank’s strategy to drive some momentum into the lagging economy. We can only expect their commentary to be dovish, we know that the ECB will remain as dovish as feasibly possible they want the market to keep selling the EUR as that is what will assist with the Eurozones economic recovery. As we know the ECB would like to see the EUR continue to fall to at least 1.20 so I’m not expecting any surprises from their commentary, if we do get a surprise it’s going to be to the downside, thus giving us an outside chance that this could provoke some market reaction.

Friday 7th November 2014

AUD – RBA Monetary Policy Statement – 12:30am

Similar to the aforementioned RBA rate statement we can expect the RBA’s commentary here to be comparatively dovish conveying that the RBA would like to see their currency devalue further. If you are positioned shorting the AUD from earlier in the week this data point could provide another trigger point for the price to weaken further or if the AUD has during the week risen in value we could be looking at any rallies as attractive price levels to get in at and start selling the currency given the vista of RBA strategy at present.

USD – Non-Farm Employment Change/ Unemployment Rate/ Average Hourly Earnings – 01:30pm

These are the three main events for the week; concerning the NFP figure the market is going to be viewing any figure beyond 200k as positive for the USD as it will denote a healthy expanding economy. If the figure falls short of the 200k milestone admittedly the USD will sell-off but these data points alone are nowhere near enough to alter the big picture surrounding the USD. That means as traders we want to be viewing any shifts to the downside for the USD as gainful levels to get in at and start buying the currency back particularly on pairs like USDJPY where we can expect a prolonged consistent shift in price action over the coming weeks and months in favour of the Dollar, if the figure comes out positive of course we can expect the USD to spike up higher and take advantage of that accordingly. What we’re really interested in is the quality of the US labour market, so is the average American earning more money and improving on their standard of living, that’s the big question. The average hourly earnings figure tells us that and it’s forecast to go up 0.2% month on month versus the previous level, if that happens it will be a very positive boost for the USD and investors will buy into that. As we know the Fed are focussing on the quality of their labour market we are presented with a situation whereby even if we get a positive NFP that cut be weighed down by a negative average hourly earnings, so don’t be confused if we observe that happening as we know that the market taking cues from the Fed will be focussing on the quality. Regardless of what happens pertaining to the USD one piece of negative data won’t change the overall bias surrounding the currency over the next week or so, therefore if the market does sell the Dollar off following a negative data point it presents us with opportunity to get in and buy the currency back, otherwise if we get positive data it’s a simple case of getting in and riding the trend of continued USD strength.

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