It’s going to be a busy NFP week as we also have 3 central bank decisions coming up!
Not only do we have the FOMC statement, but we also hear from people at the BOE and ECB.
Before that, ICYMI, I wrote A brief summary of market themes We pushed the currency pair higher last week. Check it out!
And here are some potential market moves to watch this week:
Major economic events:
New Zealand Quarterly Employment Change (January 31, 9:45pm GMT) – New Zealand economic data could be the first to rock the forex boat this week as the country plans to print its fourth quarter 2022 jobs report. There is a nature.
A slowdown in employment is notable as analysts forecast a meager 0.3% increase in employment over the period. Wow While lower than the previous 1.3% increase, it may still be enough to stabilize the unemployment rate at 3.3%.
euro zone flash CPI (Feb 1, 10:00 am GMT) – A brand new month start with a very early look at Eurozone inflation for January.
Declining price pressure is expected, with headline flash CPI rising from 9.2% to 9.0% in January and core numbers falling from 5.2% to 5.1%.
This could indicate that the ECB’s tightening efforts are already paying off, with the central bank likely to slow down with rate hikes or stop altogether.
FOMC statements and pressers (Feb 1 7pm GMT) – Of course, traders are all focused on the US Central Bank’s next move, so the main event starting in February could be the FOMC decision.
Another 0.25% rate hike could be in the card as Fed Chairman Powell reiterated that he is not complacent when it comes to avoiding inflation. This should come as no surprise as investors want to know what the Fed plans for the rest of the year.
As such, press conferences could increase dollar pair volatility, especially if the Fed hints at a shift in policy bias.
BOE monetary policy decisions (2nd February 12:00 PM GMT) – The Bank of England will also announce a policy decision this week, possibly raising interest rates by another 0.50%.
Note that policymakers will have to strike a rather delicate balance as the UK economy still struggles with high inflation and low growth. may indicate an opponent of
ECB Monetary Policy Statement (Feb 2, 1:15pm GMT) – The ECB could then announce its own 0.50% rate hike in its February policy decision.
The move seems already priced in as the Eurozone economy has shown a number of improvements over the past few months. Also, his hawkish ECB members had recently pushed for more aggressive tightening efforts.
US Nonfarm Payrolls Report (February 3rd, 1:30pm GMT) – Who can forget the US NFP coming up this Friday?
Uncle Sam is poised to report a further slowdown in employment, which is projected to rise by only 193K in January compared to an increase of 223K earlier. % to 3.6%, but rising labor force participation may also have an impact.
Dollar traders are also likely to pay attention to the average hourly earnings numbers, which are expected to rise another 0.3%. Attention to price pressures may continue as wage growth is stronger than expected.
Forex settings of the week: EUR/NZD
Expect a EUR/NZD breakout this week as both the Eurozone and New Zealand economies host top-level events!
The pair has been consolidating inside a symmetrical triangle on the hourly timeframe with low highs and high lows, with price currently hanging to the bottom.
The breakdown could start a drop the same size as the formation spanning around 350 pips. Similarly, a move over the vertex of a triangle can be followed by a rally of that height.
However, at the moment the technical indicators are giving different signals.
The 100 SMA is below the 200 SMA, suggesting that the floor is more likely to be breached than held. Meanwhile, the Stochastic appears poised to rise, suggesting another bounce is on the horizon.
A quarterly jobs report from NZ is due early in the week, so a bearish reading may be enough to bring the EUR/NZD back to the top of the triangle.
An ECB announcement could then spur a rally or break in the pair, so be sure to keep an eye out during that event!