While the Showa holiday is being observed in Japan, the BoJ has apparently reacted with an intervention after seeing the USD/JPY race to new highs in the wake of the central bank's decision to hold its Policy Rate at 0.10% on Friday. If in fact the Bank of Japan has acted when most Japanese financial institutions are celebrating a long holiday weekend, the reaction to the intervention will be noteworthy when Japanese currency traders return to their desks tomorrow. The question obviously becomes whether large players in the JPY will continue to wager against the Bank of Japan's current monetary policy or if the apparent intervention will make them cautious.
U.S data this past Thursday turned in rather clumsy statistics starting with the Advance Gross Domestic Product growth results which showed the American economy is slowing. However, the GDP Price Index came in slightly higher than anticipated. This caused some tremors in Forex. Friday was followed by additionally troublesome readings when the University of Michigan's Consumer Sentiment outcome was weaker than expected, but the U of M Inflation Expectations gauge was higher than the previous month's report.
The USD began to show signs of weakness in many major currency pairs last week. Perhaps the expectation that the worst of Federal Reserve outlook has now been absorbed is playing into the Forex results. However, the past four months of trading have produced a continuous choppy wagering landscape for speculators and clarity still does not exist.
Suspicion of the Bank of Japan's intervention this morning and the creeping shadow from the U.S Federal Reserve which is scheduled to deliver their FOMC Statement this Wednesday have created trading bogeymen in many financial assets. The strains in the major equity indices, Treasuries and Forex are prime examples. While day traders try to find fair market value technically and financial institutions seek equilibrium, most observers likely have nervous behavioral sentiment as they consider mid-term prospects. The past month of speculative trading in Gold has produced record highs, but ran into resistance the past week as questions arise about USD inverse correlations not being technically efficient recently.
Monday, 29th April, Germany - Consumer Price Index - the inflation results from Germany should be given attention. The number will certainly affect sentiment surrounding the ECB and the EUR/USD, however the report should not cause an earthquake.
Tuesday, 30th April, China Manufacturing PMI - the nation has been making claims via government officials the economy is showing signs of a rebound. Yet, disturbing consumer data continues to be seen. The manufacturing statistics from China though will also reflect demand in what is generally accepted as a recessionary period for many global spheres. Traders of the USD/CNY should pay attention to the outcome, the currency pair has incrementally climbed and there are rampant whispers about China undertaking a policy to weaken the Chinese Yuan to spur economic growth.
Wednesday, 1st May, U.S Federal Reserve Funds Rate and FOMC Statement - the Fed will not change its interest rate this week. What will be noteworthy is how Fed Chairman Powell presents this month's FOMC Statement rhetorically as he is asked questions during his Press Conference. We are certain to hear words mentioned like 'lagging data and positive signs regarding the potential of weakening inflation'. The question financial institutions want to know is how long will they have to wait for a change to the Federal Funds Rate. The Fed is likely to try sounding cautiously optimistic, but will it be believed? Forex will react to the Fed's policy meeting pronouncements, but no major surprises should be expected. Some observers may find interesting evidence regarding the future for Fed's policy via the price of WTI Crude Oil which is hovering near 83.00 USD per barrel as of this writing, because stable energy prices are a key factor regarding inflation.
Thursday, 2nd May, U.S Weekly Unemployment Claims - the jobs data which will start to be delivered late this week will get attention. Forex traders however will be swimming within the riptides already created by the Federal Reserve's policy.
Friday, 3rd May, U.S Non-Farm Employment Change Numbers and Average Hourly Earnings - these reports will cause a reaction. What financial institutions will be on the hunt for is weaker than anticipated hiring. The inflation numbers from the wages report will be a factor too. The USD traded with a slight decline in Forex last week, those who believe the greenback has been too strong and are inclined to remain sellers should pay attention to the U.S jobs numbers. If the headline hiring number is stronger than anticipated, analysts will rush to the back pages of the statistics to see if part-time hiring is still outpacing full-time employment.