3 November, 2014
It was rather remarkable week last week in global financial markets. The USD index making another weekly high after the FED announcing the expected ending of the QE3. The QE3 news and the hawkish FED signals took the market like a USD tsunami enabling the greenback to gain extra strenght.
The USD gained against the Kiwi the most as the Reserve Bank of New Zealand kept its official interest rate at 3.5%. The RBNZ Governor G. Wheeler commented that high NZD remaines "unjustified and unsustainable". Meanwhile on Thursday the Chinese authorities lifted the temporary import ban from the New Zealand’s biggest dairy exporter which lead the NZD to strengthen for a short period but could not sustain its momentum. That being said, short opportunities continues in Kiwi, majorly against the USD.
Japan’s Abenomics once again was on stage with its big news came as the Bank of Japan expanded its monetary stimuluis by 10-20 trillion Yen ($90.7 billion to $181.3 billion) to 80 trillion yen ($725 billion) annually in a 5/4 vote. The BoJ announced that they would also increase the government debt purchases amd extend the average duration to 7-10 years. Following the BoJ announcements the JPY depreciated massive 300+ pips against greenback while the Nikkei index rose by 3%.
The upcoming week is expected to be full of volatility. In Europe the most market driving headline are expected to be the ECB’s press conference on Thursday and Mr. Draghi’s comment on the European banking stress test. In the US employment situation report and the ISM Non-Manufacturing PMI are expected to create the USD.
Monday, November 03: The market is expected to be opening in Asia with the Chinese October HSBC purchasing managers’ index (PMI) data and in Japan Monday is a market holiday.
Later during the European session, October PMI results from leading European countries will be the Euro driving announcements and in the US the Institute for Supply Management(ISM) Non-Manufacturing PMI and Autodata total US vehicle sales data will be the USD driving fundamentals.
Tuesday, November 04: Australia will be on the stage early on Tuesday with September trade data and RBA’s monthly rate announcement which is expected no to change its policy. During the European session the European September PPI data will be the most important EURO data release. US and Canada will announce September trade data during the US session.
Wednesday, November 05: New Zealand will open the floor on Wednesday with its employment figures. However right after BoJ’s Governor Haruhiko Kuroda is expected to get the investors attention globally due to last week’s BoJ announcements.
Later on during the day the European services PMI data, the US ISM Non -manufacturing data and ADP Non-Farm Employment Change data are expected to drive the market volatility.
Thursday, November 06: Fundamentally it is going to be busy on Thursday. Starting focus will be on Australia’s Employment.
In the UK we have the BOE’s Monetary Policy Committee (MPC) monthly Official Bank Rate announcement will attract the most attention on the cable. Afterwards we will have the Canadian building permits data announcement and the US unemployment claims.
However the most important market mover will be the ECB Conference. Although no major policy change is expected, investors will be looking for specific market-driving hints.
Friday, November 07: Australia’s RBA once again will be on stage on Friday with its Statement on Monetary Policy. Later on during the day US session we will have one of the most anticipated events of the month - the US Non-Farm Employment data. Although NFP data creates volatility across the board USD/JPY will be most likely the most volatile pair of the day.
Finally the Chinese trade data will be released on Saturday, which could potentially create Gap for the market opening on the following Monday.
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