Start your trading week right by prepping for these top-tier catalysts and checking out my potential trade setup.
Don’t forget to review which factors drove forex market price action last week, too!
Major Economic Events:
BOJ monetary policy decision (Apr. 27) – No actual monetary policy changes are expected from the Japanese central bank this week.
Recall that the BOJ already shifted to more flexible asset purchases, so they’re likely to sit on their hands for now.
Take note, however, that policymakers will be sharing their updated growth and inflation forecasts in the BOJ Outlook Report. Any significant revisions could still have a strong impact on yen direction!
Australian quarterly CPI (Apr. 28, 2:30 am GMT) – Slightly stronger inflationary pressures are eyed for the first quarter of the year, with the headline reading to indicate another 0.9% gain and the trimmed mean CPI to show a 0.5% uptick.
Stronger than expected readings could revive RBA rate hike hopes, although it’s also worth noting that the central bank set a pretty high bar of 2.5% inflation before tightening.
Canadian retail sales (Apr. 28, 1:30 pm GMT) – A strong rebound in consumer spending is eyed, with the headline figure slated to recover by 4.0% after the earlier 1.1% drop and the core reading to show a 3.7% gain from the previous 1.2% slide.
Keep in mind that the BOC already shifted to a more hawkish stance while upgrading its growth forecasts, which suggests there’s a strong potential for an upside surprise with retail sales data.
FOMC statement (Apr. 28, 3:00 pm GMT) – The Fed would likely keep interest rates and asset purchases unchanged for the time being, but this event could still spur big moves among dollar pairs.
Policymakers are also expected to reiterate that they won’t be tightening until “substantial further progress” on the economic recovery has been made.
U.S. advanced GDP (Apr. 29, 1:30 pm GMT) – An even stronger growth figure of 6.5% is eyed for the first quarter of 2021, as the reopening of more businesses and optimism about the vaccine rollout likely lifted economic activity.
Also note that the latest round of government stimulus has just kicked in for this particular period, so there’s a possibility of an upside surprise for growth figures.
Forex Setup of the Week: USD/JPY
This pair recently broke above its long-term descending trend line, indicating that a major reversal from the downtrend is due.
However, price might need to retest the broken resistance which might hold as support. Applying the Fib retracement tool reveals that this lines up with the 50% level where buyers might be waiting to hop in.
Technical indicators suggest that dollar bulls are ready to charge, with the moving averages just completing a bullish crossover and Stochastic already indicating exhaustion among sellers.
Better keep tabs on the BOJ decision, FOMC statement, and U.S. advanced GDP which could be catalysts for a big move!
