The currency markets will likely experience some considerable volatility throughout the week, as a host of key fundamental data is scheduled for release. Let’s take a look at what the calendar holds for Monday.
USD – Core Retail Sales (MoM)
The headline figure for the day is the latest US retail data. Traders and investors will be watching this release closely for a number of reasons. The first, that consumer spending has been below target as of late, and being one of the leading indicators of current economic conditions, another downside miss would compound fears of an economic slowdown, or furthermore, deflation. The second, that Fed Chair Janet Yellen dampened expectations of a US base rate hike last week with the release of dovish FOMC meeting minutes. The minutes had the effect of spotlighting upcoming data, in the sense that any disappointing releases would likely delay a rate hike further. Forecast at 0.5%, look for an upside surprise to strengthen the USD versus its major counterparts. Conversely, a downside miss would likely weaken the greenback, with a parallel gain in the value of gold.
Australian Monetary Policy Meeting Minutes
The second major fundamental event of the day is release of the Australian Monetray Policy Meeting Minutes. The Reserve Bank of Australia left interest rates at a record low of 2.50% at the end of last month, and traders will look to the minutes to gain insight into the reasoning behind the decision. There have been mounting fears in Australia that the nation’s economy may suffer some collateral AUD damage as a result of a struggling Chinese economy. This likely factored into the decision, and the minutes will reveal just how concerned the Australian decision makers are about its potential impact. An express concern would likely result in a dovish tone to the minutes, which would in turn, lead to likely weakening of the AUD against its major counterparts. Conversely, if the decision makers conclude that the Chinese slowdown will not weigh too heavily on the Australian economy, it could indicate a near-term rate hike. This would strengthen the AUD throughout the Asian session and into the Tuesday morning European market open.
To contact the reporter of this story; Samuel Rae at Samuel@forexminute.com