EUR/USD
[ul]
[li] This will be an eventful week for the EUR/USD traders. Investors will be focused on German Ifo index (on Monday, 9:00 GMT). Our forecast for this index is slightly above the market consensus. Macroeconomic indicators in major European economies deliver promising messages for economic developments in the coming months in the Euro zone. The main causes for economic recovery in European economies are weaker EUR rate that has a positive impact on exports and low oil prices that lift purchasing power of consumers and decrease producer costs.
[/li][li] Then investors’ attention will shift to Fed Chair Yellen testifying before Congress on Tuesday. Let us remind that we had dovish minutes and some quite hawkish speeches from Fed officials recently and the Congressional testimony would be a good opportunity to clarify to policy outlook. We do not expect any hawkish hints from Yellen given some weaker macroeconomic data from the U.S. economy.
[/li][li] On Wednesday ECB’s Mario Draghi will testify to European Parliament in Brussels.
[/li][li] We have also U.S. CPI scheduled for Thursday and revision of U.S. Q4 GDP data - in our opinion economic growth will be revised down to 1.7% qoq annualized from 2.6% announced previously.
[/li][/ul]
JPY
[ul]
[li] JPY traders will be focused on Japan’s macroeconomic releases scheduled for Friday – CPI, unemployment rate, retail sales, household spending and industrial output. We do not expect significant changes in the USD/JPY this week, but keep our medium-term slightly bullish bias.
[/li][li] In light of the amount of monetary stimulus that has already been announced, and the limited effects we have seen, it is no surprise that officials have signaled they do not have a problem with a weaker JPY. The question is whether the resulting benefits in the form of cheaper exports will be enough to compensate for the higher import costs.
[/li][/ul]
NZD
[ul]
[li] The NZD is on track for a solid gains on an attractive interest rate advantage vs. other major currencies and the Reserve Bank of New Zealand has signaled keeping rates on hold in the foreseeable future.
[/li][li] Investors will be watching New Zealand’s foreign trade data, to be released on Wednesday GMT. The data are important, because lower dairy prices and too strong NZD worsened New Zealand’s terms of trade and in the opinion of the central bank may weigh on economic growth. We keep our NZD/USD long position and our short-term target is 0.7660.
[/li][/ul]
CAD
[ul]
[li] After very weak Friday’s retail sales data investors will closely watch Canadian CPI data, to be released on Thursday. Agathe Côté, a deputy governor at the Canadian central bank said there was no need to fear oil-related deflation and that the next interest rate decision due on March 4 had not been predetermined.
[/li][li] A rate cut at the next meeting is widely expected, but in our opinion the central bank may surprise the markets and leave interest rates unchanged. That is why we expect the CAD may appreciate slightly in the short term and we will consider short position in the coming days. Medium-term outlook for the USD/CAD remains slightly bullish.
[/li][/ul]
Source: Forex Trading Strategies