The European Central Bank (ECB) meeting on Thursday is the main event of a busy trading week ahead. While it is expected to keep the interest rates unchanged, the press conference has the potential of creating increased volatility on the FX market.
The Euro did nothing since the June ECB meeting – it only consolidated levels, with the EURUSD offering the best example (it moved in a tight range between 1.14 to the upside and 1.12 to the downside). If a breakout is imminent, the chances are that it will happen this week.
What Lies in the Trading Week Ahead?
The trading week starts and ends with Bank of England’s Governor delivering a speech. Today, Governor Bailey participates in a panel discussion related to the Libor phasing out process in 2021. Co Hosted by the Federal Reserve Bank of New York and Bank of England, the discussion is more than interesting for traders and investors because questions from the audience are expected. Phasing out the Libor reference rate is a major issue and planning for it requires extra attention so not to disturb financial markets.
Bank of Japan tomorrow will update its monetary policy outlook. The Japanese Yen (JPY) has been trading in tight ranges lately, especially against the USD and the EUR – the USDJPY trades between 106-108 for quite some time now, while the EURJPY hovers around 120 since the June 2020 ECB meeting.
Bank of Canada is another central bank due to announce its monetary policy decision this week. On Wednesday, traders will find out what the new Governor’s plans are and the way forward for the Bank of Canada.
Australian unemployment rate will create volatility on the AUD pairs. Scheduled a few hours after Bank of Canada’s interest rate decision, the unemployment rate is expected to increase to 7.2% from the previous 7.1%. Besides the AUDUSD ongoing battle at the 0.70 level, the EURAUD cross also comes close to a round number – the all-important 1.60 level.
Thursday starts with the jobs data in the UK, as a warm-up until the ECB interest rate decision and press conference later in the trading day. The Euro will likely trade in ranges until the press conference, with traders waiting for guidance from the ECB as to future steps during the pandemic.
Finally, the week ahead ends with Bank of England’s Governor Bailey delivering another speech on Friday, at a virtual Citizen’s Panel Open Forum.
All in all, this is a non-USD week in terms of economic data, albeit the CPI in the United States is due on Tuesday. Certainly, an interesting week ahead, with something for EUR, USD, GBP, CAD, and AUD traders alike.