Analysis and Opinion »

Next week’s Forex forecast

Sergiy Zlyvko
Share on StockTwits
Published on
Next week’s Forex forecast

U.S. Federal Reserve, as expected, kept the rate at 0-0.25%, but continued quantitative easing measures folding. Committee representatives also confirmed its intention to continue the gradual phasing of QE3 folding. On the background of insufficient stability of the U.S. economy (the fall in the unemployment rate due to the reduction of the economically active population), which confirmed by recent reports, it is hardly to wait the acceleration of its pace. Therefore we still focus on macroeconomic statistics.

Japan next week will not publish significant macroeconomic statistics. Traditionally, therefore, attention should be focused on U.S. reports and the situation in the geopolitical arena. Among U.S. data the report on business activity in the service (Monday) should be highlighted, as well as data on the trade balance. The latest report is rarely making an effective response from the exchange. It adds the clarity to the economic picture yet. Traditionally we do not exclude weekly data on applications for unemployment benefits in the U.S. from the field of view, because they allow to assume whether the employment in non-agricultural sector will resume the growth. Moderately positive statistics from the United States could support the dollar, aiming pair to return to the area of the resistance of 102.70. Apart from the reports, we should pay attention and on FOMC representatives, which can shed light on the future plans of the Federal Reserve. On Wednesday, Fed head Janet Yellen will make the statement. On May 8 Evans, Tarullo, Bullard performs. As a deterrent to the growth of the pair may perform gain geopolitical risks.

Despite the fact that we do not expect changes in monetary policy at the May meeting, though the ECB decision and following this press conference, Mario Draghi remains in the spotlight. If the head of the Central Bank will change the tone of the comments on a more aggressive, the euro could get support. But we do not forget that the pair crept quite close to the level of 1.3900-1.4000, which the ECB sees as an excuse to intervene in the bidding through verbal intervention to weaken the currency. Thus, this area will be very difficult to pass. On Tuesday final data on business activity in the service sector E18 and its individual regions will be published. However, most likely, they will not call active reactions. Thus, in the coming week the pair is likely to be held within the range 1.3750-1.3900.

Bank of England will announce monetary policy decision. We do not wait changes on the level of rates and the asset purchase program. However, given the recent macroeconomic reports and statements Mark Carney that the UK economic recovery is widespread, it can be assumed that the tone of comments on the decision will be more optimistic and give reason to expect a quicker start of monetary policy tightening. In this case, the pound may be supported and provided a breakthrough last week’s motion to target the 1.7000 resistance area. In addition, attention should be paid to data on business activity in the service sector (Monday), as well as reports on industrial production and trade balance.

Share on StockTwits