Now that the major central bank event risk (Fed, BoE, ECB) has passed, it may be a bit safer to enter range trades. However, caution should still be used, especially as important inflation data out of the UK will be released next week.
Event Risk UK and Switzerland
Trading Tip - Now that the major central bank event risk (Fed, BoE, ECB) has passed, it may be a bit safer to enter range trades. However, caution should still be used, especially as important inflation data out of the UK will be released next week. As a result, this limits the time window in which a trade can be full executed, especially as GBP/CHF sits directly in the middle of its range. Given the importance of the indicators due out on May 15th, it may be best to exit any entries before this time. Furthermore, the pair has been making higher lows near support, which makes a long entry tricky. Thus, range traders will likely experience more success on a short entry, since resistance levels are more clearly defined.
UK - While the UK data schedule will be light through Friday, major event risk will hit next week. PPI can be a market-mover, but traders will certainly be looking at CPI and RPI on Tuesday in an attempt to gauge the BOE?s next move, especially after the central bank hiked on May 10th to 5.50 percent. The figures are estimated to ease back, but any unexpected increases will quickly ramp up tightening forecasts. The following day, Jobless Claims are predicted to fall for the seventh consecutive month. Such a release would be highly GBP bullish, and the concurrent release of Average Earnings could exacerbate the price action. However, if these figures prove to be a non-event, focus will shift to the BOE Quarterly Inflation Report for a look at the central bank?s outlook. Finally, Retail Sales on Friday are estimated to pick up, boding well for not only the retail sector, but for broader consumption trends as well.
Switzerland - The Swiss economic calendar will be light over the next week, with only consumption data due out. A tight labor market and a generally solid economy have helped buoy sentiment, which could give Adjusted Real Retail Sales a boost. However, given the volatile nature of this particular indicator, the actual reading may have little impact on Swiss franc trade. As always with low-yielders such as the Swiss franc, it will be important to monitor the status of carry trades, especially if there is commentary on the other major carry trade vehicle - the Japanese yen.
[B]Data for May 11 - May 18[/B] [B][/B] [B]Data for May 11 - May 18[/B] [B]Date[/B] [B]UK[/B][B] Economic Data[/B] [B][/B] [B]Date[/B] [B]Swiss Economic Data[/B] May 14 PPI Input/Output (APR) May 15 Adjusted Real Retail Sales (MAR) May 15 CPI/RPI (APR) May 16 Jobless Claims Change (APR) May 16 BOE Quarterly Inflation Report May 18 Retail Sales (APR)