EUR/USD
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[li]Assuming the most probable scenario that a compromise is reached on the Greek issue (on Monday) and that PMIs (releases scheduled for Friday) come out strong, the EUR is poised for more gains this week. Investors’ attention will be focused also on German ZEW index (Tuesday 10:00 GMT).
[/li][li]We keep our long EUR/USD position with the target at 1.1500. The medium-term outlook is bullish and in case of profit taking at 1.1500 we will be looking to get long again on dips.
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GBP
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[li]The GBP/USD traders will be focused on CPI releases scheduled for Tuesday (09:30 GMT). We expect CPI reading at 0.2% yoy, below the market consensus of 0.3% yoy. Let us remind that the BoE expects in its recent inflation projection that CPI in the second quarter of this year is likely to fall to a record-low annual rate of zero. The central bank forecasts CPI will climb steadily to its 2% target in two years’ time.
[/li][li]Another important event for the GBP/USD traders is scheduled for Wednesday – the release of BoE minutes. We expect the MPC to vote unanimously to keep rates on hold at its February meeting.
[/li][li]Investors will be also watching UK jobs report, to be released on Wednesday. Any upside surprise in earnings growth, closely monitored by the central bank, would increase the chances that the BoE is more inclined to ignore temporary fall in inflation.
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JPY
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[li]JPY traders are waiting for Japan’s GDP growth reading for the fourth quarter (Sunday, 23:50 GMT). We expect growth by 0.9% qoq, in line with the market consensus, after a fall by 0.5% qoq in the third quarter. Good GDP figures may strengthen the JPY only in the short term.
[/li][li]We do not think that acceleration in Japan’s GDP growth will result in the change of long-term bullish trend on the USD/JPY. The Bank of Japan is still expanding its balance sheet. Moreover, the Japanese government decided in December to start a new fiscal stimulus program to counterbalance the effects of the introduction of the first consumption tax hike in April. It also delayed the second tax hike, further pushing out the originally intended start of the process of gradually reducing the fiscal deficit.
[/li][li]There are still big challenges ahead of Japan’s economy, while the Fed is getting closer to interest rates hikes. That is why medium-term outlook for the USD/JPY remains bullish.
[/li][li]The Bank of Japan meeting is scheduled for Wednesday. We do not expect any additional action from monetary authorities. In our opinion existing measures provide reason enough to further weakening of the JPY.
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NZD
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[li]The NZD traders will focus on retail sales data for the fourth quarter (Sunday 21:45 GMT). The market expect retail sales to grow by 1.3% qoq. However, consumer confidence has shown some signs of improvement recently and an upside surprise cannot be excluded.
[/li][li]Another important event for the NZD investors is RBNZ Governor Wheeler’s speech scheduled for Tuesday 19:00 GMT.
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Source: Forex Trading Strategies