2023-01-31 18:51
Forex fundamental analysis
A review of last week's important events
Last week, there weren't any significant events, that affected the forex market, but some economic data attracted the market's attention. The first data that surprised the analysts was the inflation rate growth in Australia, which was contrary to expectations, based on that, the analysts speculated that this inflation growth might occur in other countries as well. The second notable event was the US data, which, contrary to expectations, indicated the US economy's growth and made the dollar a little stronger.
Analysts will pay special attention to the countries' next inflation data as Australia's inflation rate rises and the US economy grows. If inflation rises, analysts' and traders' opinions may change, moving closer to the central bank view that they have often warned against: "Inflation is high."
The economic calendar review from January 30 to February 3
In terms of news, we can call the coming week the central banks' interest rate determination week, and its data results can determine the respective currencies' path in the short and mid-term. In terms of news, the most important data are related to the USD, EUR, and GBP, respectively.
The upcoming week will be a very decisive week for the USD, due to events such as the Federal Reserve meeting and the Nonfarm data that will release on Friday.
On Tuesday, at 03 pm UTC, the US CB Consumer Confidence index (January) (previously: 108.3 | forecast: 109.2) will publish. This data can attract the market's attention if it's published with a big difference, more or less than the predictions. If high numbers are published, the dollar will probably become strong at the moment of the news release, and if negative numbers are published, the dollar will likely weaken. But according to the Federal Reserve meeting on Wednesday, the fluctuating movements at the moment of the news release will not last long, and after some time, the price will probably return to the spot of the moment before the data release.
Wednesday, February 1, will be a day full of news for the US dollar. First, at 01:15 pm, the report on ADP nonfarm employment change (January) (prev: 235k | fore: 170k) will be published. Then, at 03 pm, the ISM manufacturing PMI report (January), one of the Federal Reserve's favorite data (prev: 48.4 | fore: 48.0), will publish.
It seems that on Wednesday at 07 pm, the Federal Funds Rate will increase by 0.25% from 4.5% to 4.75%.
At the same time, FOMC Statement and the US Federal Reserve Committee's economic estimates report will be published, which will have significant points.
At the moment of this data release, symbols related to the US dollar can fluctuate significantly.
On Wednesday, at 07:30 pm, the FOMC Press Conference will be held. Mr. Powell's statements, the US Federal Reserve's chairman, and the journalists' query will be important and have key points that can determine the market's general direction and affect big movements in metals, stock indices, stocks, energy, and the USD related currency pairs and even the digital currency.
The USD could rise and influence the relevant symbols if Powell convinces the markets that he has no plans to lower interest rates before 2024. However, investors are unlikely to bet on a steady rise in the US dollar before the employment and inflation data release in January. In addition, the Federal Reserve will release an updated summary of its economic forecasts in March and is likely to refrain from changing its stance on the policy outlook until then.
Important NFP data is published on the first Friday of every month. At 01:30 pm, the US nonfarm employment report - NFP (prev: 223k | fore: 193k) and unemployment rate (prev: 3.5% | fore: 3.6%) will publish. At the moment of the news release, the focus is more on the NFP data, and the dollar-related symbols will perform good fluctuations. But in general, the analysts will review the results of these two data, with the average hourly earnings m/m growth rate index. Note that out of the 8 NFPs published in the past, 7 of them were better than the forecasts, which indicates the US labor market's good state, if this process continues and goes according to the Federal Reserve's plan, it will strengthen the US dollar. However, analysts will begin to predict the possibility of a change in the Federal Reserve's policies, if the published US labor market state is not good, which will weaken the dollar.
On the same day, at 03 pm, the nonfarm PMI index (ISM report) (prev: 49.6 | fore: 50.6) will be released. If this data is higher than the forecasts, it is in favor of the dollar, and if it is less than 50, it indicates a danger alarm in the US economy.
For the eurozone, this week, there will be important data such as inflation and the European Central Bank meeting, which can determine the strength of this currency in the short and mid-term.
On Tuesday at 08:55 am, the German Unemployment Change for January will be published. Then at 10 am, the Prelim Flash GDP q/q of the Euro area will release, and after that, the consumer price index's important data or the German inflation, with the forecasts of inflation increase, will be published at 01 pm.
On Wednesday, at 08:55 am, the German Final Manufacturing PMI and the Final Manufacturing PMI of the euro area will be published 09 am. Also, the euro zone's inflation rate will release at 10 am.
The publishable data on Tuesday and Wednesday are important because they will directly affect the European Central Bank's meeting, which will be held at 01:15 pm on Thursday to decide the Main Refinancing Rate. The European Central Bank will likely increase the interest rate by 0.5% to 3%.
However, the ECB Press Conference will be more important than the ECB meeting to decide the interest rate, which will be on the same day at 01:45 pm. In recent meetings, the European Central Bank has always emphasized its aggressive policies, and if the inflation data on Tuesday and Wednesday is incremental, there will be a possibility of continuing aggressive policies.
The British pound has a similar situation to the euro. First, on Wednesday at 09:30 am, the Final Manufacturing PMI will be published.
The most important weekly event for GBP will be related to the Uk Official Bank Rate determination, which will release on Thursday at noon. According to forecasts, the British interest rate will also increase by 0.5% from 3.5% to 4%.
Another important weekly event for the GBP is the BOE Monetary Policy Report, which will also publish at noon on Thursday.
There will be a press conference with the BOE chairman at 02:15 pm, who will likely make important points.
For the CAD, the GDP m/m (November) (prev: 0.1% Fore: 0.1%) will release on Tuesday at 1:30 pm.
For the NZD on Tuesday at 09:45 pm, Employment Change q/q (Prev: 1.3% Fore: 0.3%) and Unemployment Rate (Prev: 3.3% Fore: 3.3%) will publish.