It’s a quieter week ahead, at least in terms of top-tier economic releases, but here are some potential market movers to watch out for.
We’ve got CPI figures from Australia and the eurozone, plus GDP figures also from Australia and Canada.
Before all that, ICYMI, I’ve written a quick recap of the market themes that pushed currency pairs around last week. Check it!
And now for the closely-watched potential market movers this week:
Major Economic Events:
U.S. durable goods orders (Feb. 27, 1:30 pm GMT) – This isn’t usually a major market mover, but the lack of any other big dollar catalysts for the most part of the week might generate a reaction from this mid-tier one.
Results are expected to come in mixed, with analysts expecting a 0.1% rebound in the core figure and a 3.7% decline for the headline reading. Still, stronger than expected results could keep hopes up for more Fed rate hikes.
Canada’s monthly GDP (Feb. 28, 1:30 pm GMT) – This growth figure would round up the December quarter, and the Canadian economy might disappoint with a flat reading for the month.
This comes after a series of measly 0.1% monthly GDP figures, which could add up to a not-so-stellar Q4 2022 result and remind Loonie traders that the BOC is set on pausing its tightening cycle soon.
Australian CPI (Mar. 1, 12:30 am GMT) – Starting off the new trading month is Australia’s quarterly CPI figure, which is slated to show a slower pace of price pressures at 8.1% versus the earlier 8.4% read.
Weaker than expected results could cast doubts on the RBA’s ability to make at least a couple more rate hikes in their next policy meetings.
U.S. ISM PMI readings (Mar. 1 & 3, 3:00 pm GMT) – Uncle Sam will be releasing another batch of PMI figures late in the week, this time from ISM. Now these contain helpful clues for the official NFP report due next week, so make sure you keep tabs on the jobs component!
Eurozone flash CPI (Mar. 2, 10:00 am GMT) – There has been a lot of chatter from ECB officials on the need to keep hiking rates aggressively, so this preview of the region’s inflation figures could support their hawkish views.
However, a dip in headline CPI is eyed, as the flash reading could slow from 8.6% to 8.2% in February while the core figure likely held steady at 5.3%.
Forex Setup of the Week: AUD/JPY
AUD/JPY 4-hour Forex Chart by TradingView
The Land Down Under’s quarterly CPI and GDP releases should provide some volatility for AUD pairs this week!
I’m looking at this neat rising wedge on AUD/JPY, as the pair is already down to the formation’s support area. Are we about to see a break lower?
A hawkish twist in the RBA’s rhetoric over the past weeks may have kept the Aussie’s head above water, but it looks like market watchers aren’t seeing enough data to support the upbeat view.
Should inflation and growth figures disappoint this week, we could see a sharp drop for AUD/JPY below the wedge support, followed by a selloff that’s the same height as the chart pattern.
On the other hand, upside surprises could reaffirm the view that the RBA can afford to hike at least a couple more times in the coming months.
If that’s the case, AUD/JPY could bounce right back up to the top of the wedge around the 94.00 major psychological resistance. Note that technical indicators are suggesting more gains, as the 100 SMA is above the 200 SMA while Stochastic is pulling higher from oversold levels.
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