Market closing last week marked by stronger USD against Yen and CHF, as well as the Euro skydiving sport. The first impressed the fact that safe haven currencies once again lost its fans as traders seek profit from more volatile currencies. The second fact once again tell us how ECB jawboning always successfully managed to push Euro down. What else we could hope for this week?

Market closing last week marked by stronger USD against Yen and CHF, as well as the Euro skydiving sport. The first impressed the fact that safe haven currencies once again lost its fans as traders seek profit from more volatile currencies. The second fact once again tell us how ECB jawboning always successfully managed to push Euro down. What else we could hope for this week?

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Today (12/5), highest risk on financial market is represented by political unrest in Ukraine and Bangkok, but we don't think they are going to mean so much for price movements in forex market. On the contrary, these four points have to be observed carefully:

1. Australian Economy Dynamics

Sentiment on AUD generally positive on a moderate level. At this point, we could say that Chinese slowdown has significant impact on Australian export import, but internally, Australia is all right. Beside of that, China industrial production in Tuesday is predicted to up a bit to 8.9% from 8.8%. But the positive sentiment turn it into a critical point; slight slip might change the direction of AUD greatly.

2. Poundsterling On Caution

Another positive euphoria experienced by Poundsterling. The perfect mix of impressive UK data and Bank of England largely positive policy guidance successfully brought GBP to high levels. However, whether it will continue to go up or go down will be determined by Wednesday fundamentals. Those are unemployment and inflation dataset, also BoE Governor Mark Carney speech.

Claimant Count Change is expected to improve from -30.4k to -30.0k, and unemployment rate is hoped to drop from 6.9% to 6.8%. If these come true, then they are good news for buy-GBP lovers. But even more important is that in the next hours, Carney is scheduled to speak and inflation is scheduled to be announced. So far, Carney has not give the green lights for UK bencmark interest rate hike, but the market usually respond well to insights about UK economy recovery. Therefore, as long as Carney remain sanguine about UK economy, then GBP could go on with the bullish trend. But if Carney mentioned we are concerned about..., then the bulls might turn into bears.

4. Crosses, Take Note On Central Bank Governor Speeches

A few leading central bank governors are going to speak this week. Graeme Wheeler of RBNZ will open the stage and influence NZD in early Wednesday, followed by Carney that certainly hold the fate of GBP in the next few hours. In Thursday, Haruhiko Kuroda is scheduled to speak in an event in Tokyo. Although the market probably is going to relax in responding Japan quarterly reports, but they won't ignore Kuroda that easily.

As has been known, Japan hiked consumption tax in April. Consequently, during the first months of 2014, people are buying more than usual before prices rose. Therefore, dataset on those months are predictably going to rise. However, they are not exactly going to infer anything but temporary respite. That is why Yen volatility these weeks is more influenced by Ukraine crisis and its safe haven properties rather than Japan fundamental releases. Yen upward movements following economic data improvements are not expected to last for long. However, if Kuroda mentions anything about stimulus, then that is going to be a game changer.

5. EURUSD Volatility Ought To Drop Slightly

Last week EURUSD volatility remained high till the end, but that is not expected to survive till this week. There are several high impact releases from Eurozone and the US, but ECB and The Fed are not expected to change anything from their policies. Therefore, EURUSD upward and downward movements in this period is most probably not going to be trend-setter.

Predictions for US Core Retail Sales and general Retail Sales are varied around rising or falling a little. The uncertainty makes it the most influential data for EURUSD.  The subsequent dataset are mostly predictable, although deviations are possible. Eurozone CPI yoy is estimated to stay on 0.7%, and CPI mtm is estimated to fall from 0.9% to 0.2%. US CPI mtm is estimated to drop as well, from 0.2% to 0.1%. However, surprises might come from Friday US short-term unemployment and Building Permits data. Those two has been surprising us for a several times now, and we won't be that surprised again if they do it again.

Well, this is our forex editorial this week. Good luck with your trading, and take care!