EUR/USD
[ul]
[li]The first regular FOMC meeting of the year is scheduled for this week. We do not expect any policy action and any major changes in wording. The discussion will most likely focus on the inflation outlook, especially after significant strengthening of the USD and a fall of oil prices.
[/li][li]The EUR/USD traders will be waiting for Ifo index reading (Monday, 9:00 GMT). Weaker EUR exchange rate, the low oil price and a robust US economy may be supportive for a strong Ifo reading and stronger EUR at the beginning of next week. Let us remind we had very strong ZEW reading last week that was, however, overshadowed by QE decision.
[/li][li]The U.S. Bureau of Economic Analysis will release its advance estimate for U.S. GDP growth in the fourth quarter (on Friday). The median forecast is at the level of 3.3% vs. growth by 5.0% in the third quarter and our forecast is slightly less optimistic (at the level of 3.0%).
[/li][li]We should forget about the QE decision and focus on macroeconomic data from the U.S. and the Eurozone. Our forecasts point to good macro figures this week and we expect the EUR/USD to rise. Good Euro zone macro data may be a good reason to take profits on recent EUR-selling positions.
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GBP
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[li]Last week brought a lot of events that were supportive for the GBP bears. January MPC minutes revealed a unanimous voting outcome in favor of holding rates constant and the monthly labor market report showed slightly lower growth in wages than expected.
[/li][li]GBP traders will be focused on Britain’s GDP data for the fourth quarter (on Tuesday). In our opinion the GDP growth is likely to slow to 0.6% qoq from 0.7% qoq in the third quarter. However, we are slightly bullish on the GBP/USD this week.
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JPY
[ul]
[li]In our opinion the JPY is likely to strengthen slightly next week and we are looking to get short at 119.20.
[/li][li]Japanese trade balance (on Sunday GMT), retail sales (on Wednesday GMT), and industrial production data (on Thursday GMT) are expected to improve next week.
[/li][li]In our opinion lower CPI data should not surprise investors, especially after the BOJ’s statement and forecasts’ update last week that slashed medium-term CPI path.
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NZD
[ul]
[li]Ongoing decline in commodity prices triggered speculation about the RBNZ becoming more dovish. The expectations strengthen after surprising BOC decision last week.
[/li][li]The NZD/USD declined sharply last week and the RBNZ decision (Wednesday GMT) will be highly important for the NZD traders. The consensus still expects the rate to remain unchanged. However, some market participants may be disappointed in case of no change in monetary policy. This may cause a bounce back on the NZD/USD.
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Source: Forex Trading Strategies