It’s gonna be a very busy week since we’ve got the RBA and BOC interest rate decisions, plus the U.S. CPI release!
What are analysts expecting from each top-tier event?
Major Economic Events:
RBA rate statement (Dec. 7, 3:30 pm GMT) – The Australian central bank is widely expected to keep interest rates on hold at 0.10% once more.
Although there have been some notable improvements in the Land Down Under’s economic performance, policymakers are likely concerned about the Omicron variant that might prompt another downturn in growth.
In their previous rate statement, the RBA already hinted that their first rate hike won’t happen until 2024 due to weak price pressures and other uncertainties.
ZEW economic sentiment figures (Dec. 7, 10:00 am GMT) – The eurozone and its top economy, Germany, are about to print the results of the ZEW economic survey for December.
Germany’s reading could dip from 31.7 to 25.9 while the entire region’s index probably fell from 25.9 to 22.4, reflecting weaker optimism among institutional investors.
BOC interest rate statement (Dec. 8, 3:00 pm GMT) – The BOC is also likely to sit on its hands for the time being, keeping rates on hold at 0.25% again.
Jobs data has been stronger than expected in the past month, which might be enough for the Canadian central bank to shift to a slightly more optimistic stance.
However, policymakers are also likely concerned about crude oil price swings and how the new COVID-19 variant might affect growth and trade.
U.S. CPI (Dec. 10, 1:30 pm GMT) – Slightly slower price pressures are eyed from Uncle Sam, as the headline CPI likely dipped from 0.9% to 0.7% while the core figure probably fell from 0.6% to 0.5%.
Weaker than expected results could further undermine tightening expectations, especially with the Omicron variant forcing policymakers to take a wait-and-see approach.
Forex Setup of the Week: CAD/JPY
Don’t look now, but CAD/JPY is closing in on the rising trend line on its daily chart!
If support holds, the pair could resume the rally back to the swing high at 93.00 and beyond. Price is already finding some buyers at the 61.8% Fib around the 88.00 major psychological mark.
The 100 SMA and 200 SMA also line up with this potential floor, but a bearish moving average crossover seems to be brewing. In that case, CAD/JPY might attempt to break below support and stage a reversal from the uptrend.
Stochastic is still pointing down to show that sellers have the upper hand, but the oscillator also looks ready to pull higher from the oversold region soon.
Better keep tabs on the upcoming BOC rate decision if you’re planning on trading this one!