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Forex News Trading Events For The Week of November 10th – 14th.

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 events that I will be looking to trade are as follows;

Tuesday 11th November 2014

NZD – RBNZ Financial Stability Report & Gov Wheeler Speaks – 08:00pm
The focal point here is the speech from Gov Wheeler, we expect him to keep in line with his dovish rhetoric we know that the RBNZ would like to see NZDUSD at 65 cents as oppose to current levels of 77cents. Therefore there is plenty of scope to the downside for the currency, but will they be able to drive the currency own to those levels given how attractive the NZD is for investors to buy, especially as a carry trade. As we know the NZD can be an attractive currency to hold, so the market will weigh in on that but the RBNZ have displayed that they are serious, they will intervene if they feel they need to, but for further intervention to take place the RBNZ need a good opportunity and at the moment there is nothing on the calendar to trigger the RBNZ to jump in and start selling the NZD in large amounts. At present there are no plans for the RBNZ to hike rates and they have removed the possibility for tightening policy from the agenda given the slight decrease in inflation. The reason inflation has fallen is due to the lull in global milk prices, which have declined considerable over the last few months now consider that the dairy trade accounts for a significant amount of the GDP in New Zealand and you have a recipe for inflation decline which of course removes pressure from the RBNZ to hike rates imminently. I would view these events as trigger points for selling opportunities on the NZD, if the currency rallies, again, I would be viewing any shift in price action as an opportunity to get in at a good level to start selling into the markets. For the purpose of reiteration, we don’t want to be selling the NZD against weaker currencies; we only want to be aiming for short trades against those stronger currencies like the USD, there is even the potential to position yourself in the markets prior to the announcement against those stronger currencies given how dovish the sentiment is regarding the currency right now.

Wednesday 12th November 2014

GBP – BoE Inflation Report & Gov Carney Speaks – 01:15pm

We had a rate statement from the boE last week which we knew not to expect anything from and as expected met with expectations by being a non event. As it stands inflation has fallen to 1.2%, we know inflation needs to be at 2% for the BoE to consider a hike, the decline in inflation has pushed back the BoE’s rate hike expectations and therefore the popular consensus is that a tightening will now come in August 2015 rather than Q1 2015. This has obviously had a knock on effect to the GBP, weakening the currency significantly particularly against the USD with the Fed now speculating whether to hike rates sooner. Hence this inflation report will be pivotal, we expect it to be negative but if we couple this with the commentary coming from it will give us a good indication on what direction the GBP will take over the coming weeks and months.

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