CAD was the biggest loser this past week against the likes of NZD, GBP and EUR around 0.8-1%. The euro enjoyed an expected hike in its interest rate. However, in the long term CAD is still economically one of the weakest.
Canada's GDP is at 0% with unemployment at 6.6%, the highest among the major currencies.
What moved the forex market this week?
The most noteworthy news mainly surrounded the euro and the Canadian dollar. For EUR:
- Interest rate decision (2.4% came out as predicted and better than the previous 2.15%)
For CAD, the interest rate remained the same.
GBP, which was fairly strong, did produce some mixed signals for data releases. While the manufacturing numbers were slightly better than expected, the GDP MoM came out at -1%, worse than the projected 0.1%.
What could move the forex market next week?
JPY, USD and GBP all have notable data releases this week. While you should keep an eye for AUD, there is only one event here: RBA interest rate decision.
Let's explore each of these four currencies in more detail.
JPY - Likely To Be Boosted Due to Interest Rate and Inflation Rate Hikes
The most crucial potential deviations here is the 0.25% interest rate hike expected and 0.2% forecasted boost on the Inflation Rate YoY. When looking at the Edgefinder's Surprise Index, we see the yen is right at the top.
These forecasts indicate a likelihood for the positive surprises to continue and, hence, strong potential for upwards movement on the chart..
USD - Should Be Up As Interest Rate Is Expected To Stay Unchanged
USD is the second-best performing currency in surprises after JPY. While there are many data releases, we should mainly be concerned with the funds rate. Here, the Fed is expected to hold. Considering that USD has been economically strong for some time, there shouldn't be any reason to see much downside pressure.
Also, there is a slight uptick forecasted for the Retail Sales MoM, from 0.5% to 0.6%.
GBP - Mixed Signals
GBP is also another currency to experience an interest rate decision. However, like the greenback, a hold is forecasted. The same applies for the unemployment rate: the 5% is expected to stay the same.
Still, the currency may be boosted slightly by an expected 0.3% jump in the Inflation Rate YoY and/or a predicted 1.5% jump in Retail Sales YoY.
When looking at both indices, GBP sits in somewhat of a neutral zone. So, expect anything to happen.
AUD - Bearish Pressure Is Likely to Remain
The main news to watch for here is the RBA's interest rate decision. Like the figures for the pound and US dollar, the expected outcome is a pause. With a persistent recent trend of negative surprises for the Aussie, it's best to have bearish sentiment for this currency.
Conclusion
The currencies we have highlighted are those with the best chance of some action. However, you are always free to analyse other pairs in the vast forex market.
For a granular look at the most impactful events in the forex economic calendar, read our article here.