Range Potential:
EURUSD
USDCHF
AUDNZD
EUR/USD
Event Risk Euro Zone and US
Trading Tip Since the year began, EURUSD has formed and broken out of two ranges. As of Friday, the pair was rising with considerable speed. With this in mind, there is considerable risk in selling short around 1.3370. Though the level is a clear pivot, it retains few other technical traits that would back its credibility. Therefore, shorts should only be placed after price action clearly reveals a turn. If EURUSD does not slow and stall before reaching 1.3370, then the momentum may carry it through resistance on a bigger move higher.
Euro Zone The European calendar is very light next week. From the Euro Zone and German dockets, there are only four indicators that have proven market worthy in the past. The first report is Tuesdays German Producer Price gauge for February. The first of two inflation indicators from the regions largest economy, factory prices are expected to heat up on the month and cool on the annual measurement. On Friday, the German import gauge for the same month is predicted to show much the same. Altogether though, the significance of these second-tier inflation reports is low since the final calculation of the consumer price index is already available. From the Euro Zones calendar, the trade balance and industrial new orders report for January will turn few heads. The numbers are both lagging and a quick scan over the already released regional reports will offer a good outlook for the officially aggregated indicator.
US After a very busy week for the US calendar, the listings thin out considerably. In the days ahead, the greatest potential for event risk comes from the FOMCs policy meeting and subsequent rate decision. While a surprise could lead to considerable movement in the majors, the probability of a shift in the groups steady outlook is slim. More likely to generate unexpected results are the number of housing indicators penciled in throughout the week. Monday starts off with the NAHB Housing Market Index. A read of industrial health, the report is valuable in its timeliness, but is often overlooked in favor of more tangible sales and construction numbers. Tuesdays February housing starts measure is one of these numbers as is Fridays existing home sales for the same period. Outside of the clear confines of the calendar, risk also lies in media-hyped fears surrounding the sub-prime lending market. If fears peak, or if there is evidence that it is seeping into other sectors of the economy, the dollars luster may dull.
| Data for March 18 March 23<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /> | | Data for March 18 March 23 | ||
| Date | Euro Zone Economic Date | | Date | US Economic Data |
| Mar 20 | German Producer Prices (FEB) | | Mar 19 | NAHB Housing Market Index (MAR) |
| Mar 22 | EZ Trade Balance (JAN) | | Mar 20 | Housing Starts (FEB) |
| Mar 22 | EZ Industrial New Orders (JAN) | | Mar 21 | FOMC Rate Decision |
| Mar 23 | German Import Price Index (FEB) | | Mar 23 | Existing Home Sales (FEB) |
USD/CHF
Event Risk US and Switzerland
Trading Tip Though EURUSD and USDCHF hold a very strong negative correlation, the two may diverge somewhat in the days to come. At present, EURUSD is very close to resistance, while USDCHF would have some territory to cover before reaching its own support. Therefore, a break higher in EURUSD does not necessarily mean range trades should be abandoned for USDCHF. Also, since the pair has just made a fresh break, Mondays price action will be important imperative in determining whether this is a false breakout or if pair is prepared to extend on its technical breach.
US After a very busy week for the US calendar, the listings thin out considerably. In the days ahead, the greatest potential for event risk comes from the FOMCs policy meeting and subsequent rate decision. While a surprise could lead to considerable movement in the majors, the probability of a shift in the groups steady outlook is slim. More likely to generate unexpected results are the number of housing indicators penciled in throughout the week. Monday starts off with the NAHB Housing Market Index. A read of industrial health, the report is valuable in its timeliness, but is often overlooked in favor of more tangible sales and construction numbers. Tuesdays February housing starts measure is one of these numbers as is Fridays existing home sales for the same period. Outside of the clear confines of the calendar, risk also lies in media-hyped fears surrounding the sub-prime lending market. If fears peak, or if there is evidence that it is seeping into other sectors of the economy, the dollars luster may dull.
Switzerland The Swiss economic calendar has returned to its usual caliber few indicators with questionable significance for market participants. Starting early on Monday, the fourth quarter industrial production read will be of particular importance. Guided by the health of the monthly SVME PMI indicator, the factory activity report could disappoint on the quarterly basis. The following day, the aggregate inflation index of import and producer price inflation should be largely overlooked by traders. Since the SNB initiated its regime of rate hikes benchmark inflation has held well below the policy groups target rate. Hence, a lower class price gauge should generate little activity. Finally, the February trade account is packed with market-moving potential as economists judge whether consumer spending will continue to have a buffer in foreign demand.
| Data for March 18 March 23 | | Data for March 18 March 23 | ||
| Date | US Economic Date | | Date | Swiss Economic Data |
| Mar 19 | NAHB Housing Market Index (MAR) | | Mar 19 | Industrial Production (4Q) |
| Mar 20 | Housing Starts (FEB) | | Mar 20 | Producer & Import Prices (FEB) |
| Mar 21 | FOMC Rate Decision | | Mar 21 | Trade Balance (FEB) |
| Mar 23 | Existing Home Sales (FEB) | | | |
AUD/NZD
Event Risk Australia and New Zealand
Trading Tip For another week, AUDNZD has produced choppy and volatile price action the key ingredients for range trading. With no serious event risk scheduled for either of the specific economies in this pair, the action in the carry crosses (AUDJPY and NZDJPY) should be monitored for volatility and direction. If both pairs the yen pairs continue to produce wide-range bars, AUDNZD will continue to make wide ranges of its own. Also, considering the excess volatility in this pair, stops and entries should be tailored to suit the large wicks the high-time frame candles (4 hour and daily) can produce.
Australia Recently, the Australian dollar has reacted to one of the top-market moving indicators its economic calendar has to offer the monthly employment change. However, looking at the action this produced in AUDNZD it is apparent that scheduled fundamental releases are taking a back seat for Aussie-based pairs. These conditions will leverage an already quiet docket for the week ahead. Monday will offer the most potent indicator with a measure of fourth quarter dwelling starts. As housing is a large part of GDP, its health will be of particular interest for policy makers. However, monthly building permits and new home sales numbers may have already price in much of the move. After this report, the indicators that populate the short list will clearly come below the radar. Only the Westpac and Conference Boards leading indicators indices have the potential to even be considered by the most ardent of fundamentalists. However, since they considerably lagging and many of their components are known ahead of time, their influence is doubtful.
New Zealand New Zealands economic calendar is almost data free next week. The only two indicators to actually make it to the race are February visitor arrivals and credit card spending due Monday and Tuesday respectively. The former is a indirect measure of tourism, though it has very rarely shown any influence on the New Zealand dollar even under extreme changes. Spending on short-term credit may be a little more influential after RBNZ Governor Alan Bollard decided to keep his hawkish bias at the last rate decision on the basis of housing and consumer spending. Elsewhere, the kiwi dollar almost certainly be pushed around by carry trade flows. Since the economy has minimal international trade, a considerable sum of NZDs FX flows are due speculatory-based as large investors move money into and out of the carry trade.
| Data for March 18 March 23 | | Data for March 18 March 23 | ||
| Date | Australian Economic Date | | Date | <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />New Zealand Economic Data |
| Mar 19 | Dwelling Starts (4Q) | | Mar 19 | Visitor Arrivals (FEB) |
| Mar 20 | Westpac Leading Index (JAN) | | Mar 20 | Credit Card Spending (FEB) |
| Mar 22 | Conference Board Leading Index (JAN) | | | |
| Pair | EURUSD | USDCHF | AUDNZD |
| Date Added | Mar-05 | Mar-16 | Mar-02 |
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