Financial World News Releases

This week has proved again that fundamental news are not even close to move the market, when sentiment leads: investors are turning towards the US and the possibility of tapering QE as soon as this summer, and discouraging US macro numbers were not enough to put dollar upward momentum down. For the upcoming week, there’s little first line data to watch coming from the US, but as usual, there will be no lack of market movers, and Central Banks will take the lead: here they are.

AUD and RBA Policy meeting Minutes, May 21st

• Hawkish: AUD bullish
• Dovish: AUD bearish
• Key pairs to watch: AUD/USD, AUD/JPY

With the release of the Minutes of the latest RBA decision to lower the cash rate by 25 basis points to 2.75%, market players will be looking for tips over next movements. RBA Governor Glenn Stevens has declared that growth in Australia was “a bit below trend in the second half of 2012, and this appear to have continued into 2013” while despite employment has continued to grow, labor force grew even more, increasing unemployment rate.
With Aussie in a bearish trend, comments pointing towards further economic slowdown and possibilities of a rate cut, will rush market players to price in another rate cut, leading to more AUD slides. A more positive wording should on contrary favor an upward correction in AUD, although may not be enough to change the trend in term.

JPY and BOJ Monetary policy decision, May 22nd

• Hawkish/no announcements: JPY bullish
• Dovish/Announcement of new measures: JPY bearish
• Key pairs to watch: USD/JPY, EUR/JPY, GBP/JPY

It will be hard for the BOJ to surprise markets this month: early April the Central Bank launched an aggressive campaign to fight deflation, announcing a set of policies that that exceeded market expectations: The BOJ will not only expand its balance sheet by purchasing longer-term debt and more exotic securities like ETFs, but will also merged its asset-purchase programs and suspended a rule that prohibited the purchase of longer-term debt.
A 2% inflation target remains the priority for PM Shinzo Abe, and market will need a large dose of facilities plus a still negative growth outlook, to take yen bearish run even further. A neutral stance coming from the Central Bank may favor some temporal yen gains that anyway won’t affect the dominant trend.

GBP and BOE Minutes, May 22nd

• Hawkish: GBP bullish
• Dovish: GBP bearish
• Key pairs to watch: GBP/USD, EUR/GBP, GBP/JPY

During the last meeting the BOE left its economic policy unchanged, refraining from taking action ahead of governor’s swap. Mervin King will step down on June 30th this year to be replaced by Mark Carney, current Bank of Canada governor. However, the latest inflation report showed the country is somehow giving signs of growth which suggest the Minutes may offer further positive comments over the economic situation.
In such case market will be little surprised, and despite bullish for Pound, most of it is already priced in and should lead to temporal rallies. A step back on comments towards a negative economic outlook will likely put GBP under selling pressure.

USD and FED Minutes, May 22nd

• Maintaining QE: USD Bearish
• Tapering QE: USD Bullish
• Key pairs to watch: EUR/USD, USD/JPY, AUD/USD, GBP/USD

Minutes had been pretty irrelevant lately, as the wording has been maintained steady: economic growth remains sluggish and will proceed at a moderate pace, while unemployment rate will gradually decline toward levels consistent with FED’s mandate. Even more, latest economic decision has shown that policy will remain accommodative, which means rates will stay at record lows and the FED will continue to buy $85 billion a month in Treasury and mortgage bonds at least until unemployment falls to 6.5%.
However, many of the voting members, even the ones that opposed earlier this year, had suggested is time to start thinking on a possible end of QE. Market has been steadily pricing it in, buying the USD in advance. A change in wording, reinforcing the possibility of tapering QE will likely see greenback extending its advance across the board, while diminishing chances of an end for QE, will likely see the currency suffering a strong set back.