The trading week starts with a…break. Today the U.S. celebrates Presidents’ Day, and so, the U.S. banks are closed, and no important economic data is scheduled throughout the day. In Europe, things look pretty much the same, despite the fact that it is no holiday whatsoever.
What Lies Ahead for FX Traders This Week?
Last week was the slowest trading week of the year so far. Sure, there aren’t many weeks to compare to, but still, the VIX (i.e., volatility index) on the U.S. stock market reached extremely low levels. Because the U.S. stock market is a driver of the FX market’s volatility, the lack of activity spilled over to the FX market. Unless something unusual happens this week, the chances are that things will continue along the same lines, as the week ahead is light in terms of economic releases.
The one piece of data to consider today is the Monetary Policy Meeting Minutes released by the Reserve Bank of Australia (RBA). However, the minutes are due after the New York cash market closes, so they will impact the Australian dollar during the upcoming Asian session.
Tuesday is all about third-tier data in the London session (e.g., Flash GDP in the Euro area, ZEW in Germany), and in the United States, the only event to consider is Fed’s Daly’s speech. Daly is due to speak about the economy and monetary policy at an event hosted by the University of San Francisco. Because questions from the audience are expected, the markets may move on some interesting remarks, if any.
Starting with Wednesday, some interesting data comes out – the CPI in the United Kingdom, the Retail Sales in the United States, and, later in the North American session, the FOMC Meeting Minutes.
Out of the three, the minutes will likely create the most volatility in the market, not because there will be something new in there, but because the market usually holds on until the minutes just in case, there is a surprise.
The trading week ends with the Euro area Flash Services and Manufacturing PMI, as well as with the United Kingdom Retail Sales. This is first-tier data, and if the market does not move until Friday, the data is enough to give the necessary impulse.
All in all, an interesting week ahead, with a wild card – the Fed’s Monetary Policy Report. It is supposed to be released around this time of the year, but it was not released last week. If it comes out this week, the U.S. dollar’s volatility is poised to rise.