Forex Minute Trade Plan – Fundamental Insights 29/04/2014

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Forex Minute Trade Plan - Fundamental Insights 28/04/2014

Here’s a look at the day’s key fundamental releases, and their likely impact on the global currency markets.

US CB Consumer Confidence

The day’s headline release is undoubtedly the latest Conference Board (CB) consumer confidence figure. The data measures the measures the level of consumer confidence in economic activity. Consumer confidence plays a huge part in economic outlook, as if individuals expect improving economic conditions they generally spend more. An increase in consumer spending will lead to an increase in production, employment, and eventually, economic growth.

The data is especially important because traders and investors are watching the Federal reserve for any suggestion that it might raise interest rates during 2014. Headline data (such as the upcoming consumer confidence release and yesterday’s home sales data) is the closest thing analysts have to a “barometer” of the Fed’s likely actions, rate statements aside.

An upside surprise would reinforce arguments for a medium term rate hike, so with the consensus forecast at 83.0, look for a release above this level to strengthen the USD versus its major counterparts. A miss on the other hand would suggest rate hike delays, so look for a release below 83.0 to weaken the currency.

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Bank of Canada Governor Stephen Poloz Speaks

The second potential market mover is the upcoming BoC Governor speech. Stephen Poloz is due to testify before the House of Commons Standing Committee on Finance, in Ottawa; an event that traders always watch closely. Why? Because his tone can offer insight into the potential future of the Canadian central bank’s monetary policy.

A dovish tone, one in which Poloz hints at maintaining relatively loose policy, would likely weaken the Canadian dollar (CAD) versus its major counterparts. Conversely, a hawkish tone, one in which the Governor hints at a tightening of policy (a raising of interest rates) would likely strengthen the CAD.

To contact the reporter of this story: Samuel Rae at Samuel@forexminute.com