General Election Week
It’s a big week in forex for a few different economies. Interest rate decisions are coming out across the board which are likely to cause a stir for a fair few currency crosses. We also have the UK General election taking place on Thursday – something very big for the Pound Sterling.
Before We Begin
Interest rate decisions are the biggest economic data releases to take place every month for the forex markets. This is the data that banks and institutions use as to dictate sentiment for the coming month. Sentiment is strongest in the first 2 weeks after the rate decision. For this reason we have a very exciting week – potentially setting trends for the coming weeks.
Let’s get into the week.
Monday 9th December economics to be aware of:
- 07:00 GMT – EUR Trade Balance (MoM)
- 22:05 GMT – RBA Speech (Philip Lowe)
Monday eases us into the week nicely with a calm flow of economic data. The first release to take note of is the German Monthly Trade Balance data. Trade Balance is expected to come out at €19 B as oppose to the previous months €19.2 B. This suggests we may see a sight downturn in the Euro, but the numbers could come out different to expectations so trying to guess the direction of the outcome isn’t wise. The impact made by the Trade Balance data shouldn’t sway markets too much so if you are holding Euro trades, I wouldn’t worry.
The day is then clear all the way until 10PM when we have a speech from the Reserve Bank of Australia. The RBA has been cutting rates, and labour figures started to weaken again over the past month – we could expect some dovish statements for the Aussie in the RBA speech. It’s important to note that anything could be said in speeches so it’s a high risk economic to trade through.
Tuesday 10th December economics to be aware of:
- 10:00 GMT – German Economic Sentiment Report
Zentrum für Europäische Wirtschaftsforschung will be releasing an economic sentiment report which looks into the investor sentiment of retail & institutional investors. The economic reports preliminary figure sets numbers at ‘0’. Neutral, but a step up from the previous figure of -2.1. I’ll be looking for a short-term positive boost for the Euro (EUR) through the release of the report.
Wednesday 11th December economics to be aware of:
- 13:30 GMT – US CPI Figures (MoM & YoY)
- 19:00 GMT – FOMC Economic Predictions
- 19:00 GMT – Interest Rate Decision & Statement
- 19:30 GMT – FED Press Conference
Wednesday sees the first of the weeks interest rate decisions, from America’s Federal Reserve. All major data for today comes from the US.
We will be kickstarting with the fundamentals just after midday. We have CPI figures coming out at 13:30 GMT where predictions are set at a neutral level. If all comes out as expected the Dollar could see a slight surge through this data.
The main focus of Wednesday will be the Interest rate decision & accompanying monetary policy statement. Rates are set to remain still at 1.75% – it’s looking likely that these numbers will come through. I’ll be anticipating a short-term bullish surge through the release of the US interest rate data.
In an instance where rates remain unchanged, attention will move to the monetary policy statement. While we can’t be sure what will be said in the statement, we can utilise the information provided in the report for use planning near-term future USD positions. 30 minutes later comes the FED press conference. This will reflect what is spoken in the monetary policy statement.
Thursday 12th December economics to be aware of:
- All Day – UK General Election
- 07:00 GMT – German CPI Figures
- 08:30 GMT – Swiss Interest Rate Decision & Statement
- 12:45 GMT – ECB Interest Rate Decision
- 13:30 GMT – ECB Monetary Policy Statement
- 17:45 GMT – Bank of Canada Governor Poloz Speech
Thursday is a jam packed day full of exciting fundamentals. First off comes the UK general election – a massive macroeconomic to consider. If Conservatives hold power Sterling will see a rise and it could be dramatic – it looks like they might win so this is where my bets are. A labour win means uncertainty which could see sterling plummet in the short-term. The result won’t be out until early hours of Friday morning though so trading in the day will be okay.
I highly recommend not trading the result on your usual account. If you want to gamble the outcome do so using a separate account with set-aside capital.
Back Into Thursday…
07:00 AM sparks the day off with German CPI figures. Figures are predicted neutral so I don’t expect to see too much excitement here. 08:30 AM sees the Swiss Interest Rate decision – predicted to come out at 0.75% the same as previous month. I am anticipating a short-term shift to the upside through the news.
We have another Interest rate decision on Thursday, this time from the ECB at 12:45 PM. Rates are looking neutral at 0%, and should be holding still as they have been for a long time. The eurozone looks to avoid negative interest rates for as long as possible but an increase is close to impossible with a fragile weakening economy. A 0% interest rate decision shouldn’t cause too much excitement but it could go either way so avoiding the Euro through midday Thursday would be wise.
30 minutes later we will see the ECB Monetary Policy which could provide some interesting points for future trades, I’ll be keeping an eye on this and will share any interesting points.
Focus then switches to the Canadian Dollar. Governor Poloz of the BoC will be making a speech on the evening at 17:45 which could also provide some clear points that I’ll use to curate future trades.
Friday 13th economics to be aware of:
- 13:30 GMT – USD Retail Sales Control Group
Note – General Election
The election result is likely to come out early in the morning on Friday after votes are all counted. Be cautious holding GBP trades through the night.
USD Retail Control Group
Retail sales control group represents the total industry sales for the US economy, and is used to measure growth or decline. Figures are expected to have risen from 0.3% to 0.4% so we can expect to see a bullish surge for the US Dollar to end the week.
Trade Safe & Manage Risk
That’s the fundamentals for this week covered, it’s going to be an exciting one with the General Election and a bunch of Interest Rate decisions. I’ll be alternating between podcasts & written articles – sometimes it’s easier to cover all the info when it’s written down – there’s lots going on close to the year end!