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Forex News Trading Events For The Week of January 26th – 30th

Jarratt Davis
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I’ve put together some analysis of this week’s Forex news events, which I hope will give everyone a good understanding of how I’m viewing the market for this week.

This week’s “high impact” news event that I will be looking to trade is as follows;

Wednesday 28th January 2015

USD – FOMC Statement & Federal Funds Rate – 07:00pm

We’re not expecting on moves on interest from the FED, in the last statement from the FOMC which was just prior to Christmas 2014 they stated that they were relatively happy with their current standing. They are not too concerned by inflation or global issues and they believe that the US is going to continue its recovery, which surely means they will continue edging towards their first interest rate hike at some point in 2015 also in their previous statement they changed their language removing the phrase “considerable time” which was more hawkish in comparison to previous statements.

However the market has began to speculate over the last few weeks that maybe the Federal Reserve can’t hike rates and the Fed will start to get concerned about falling oil prices, the global slowdown and the shroud of uncertainty that seems to be surrounding Europe weighing in on their rate hike expectations to some point in 2016.

My thinking is that nothing really has changed since the Fed last spoke so the Fed will simply reiterate what they have previously said this will in turn because of the recent speculation be taken as more hawkish or still positive which could give support to the USD. This is the first part of my trade of the week as I expect a lack of change in the FOMC statement to usher in a continuation of USD strength quieting the speculators, the second part of this trade happens later in the day with data coming from the RBNZ.

NZD – Official Cash Rate & RBNZ Rate Statement – 08:00pm

Last week New Zealand inflation fell much lower than expected it actually fell outside the RBNZ’s lower band of 1.0%. The RBNZ have previously stated (November 2014) that they are looking to hike rates again at some point in the next 12 months, following the drop off in inflation the market is starting to think is that still the case – are the RBNZ still going to go ahead and hike rates when inflation is outside of their lower band. Therefore we can view this statement as an opportunity for the RBNZ to weaken the NZD which will be most notable against the USD, who aren’t going to be more hawkish or dovish they are likely just going to be the same which the market will take as hawkish given the recent speculation. Basically this week could therefore present a great opportunity to sell the NZD on any rallies that we get, recently the NZD has fallen quite hard but we want to sell any rallies we get especially around the 0.75 area and beyond. We can trade the two aforementioned events by selling into any NZD rallies prior to the event, if we don’t get any rallies we could look to trade the aftermath of the event on the 29th once the dust has settled obviously if we do get a slightly more positive Fed and a more negative RBNZ and take some pips as the price action shifts down.

The post Forex News Trading Events For The Week of January 26th – 30th appeared first on Jarratt Davis.

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