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Forex Market movers - Month of February

February 05, 2018

There are no appointments in the month of February with the two most important central banks in the world, ECB and FED.

Draghi was very accommodating with the Euro focusing on volatility and not on the absolute level reached. The US government has clarified how a weak dollar is welcome. Two views that will be summed to the first Fed meeting with Mr Powell from which we will be able to understand the ideal path of interest rates for the coming months.

As regards the macroeconomic data of the main G20 economies, it is evident that the risk of commercial and especially currency wars after the declarations of prominent members of the Trump government is rising significantly. The recession of South Korea is just one example of what is causing the dollar weakness and it is quite clear that in the coming months we could witness volatile reactions especially within the Forex world. For this reason, it becomes fundamental to map the main macro data that will be provided monthly by the market to understand what and when volatility could provide interesting trading opportunities.

United States

The month of February immediately starts with the data on ISM manufacture scheduled for February 1st, which will be followed by the data on unemployment, factory orders and durable goods orders on February 2nd. On February 5th another important data on ISM services, while the day after we will get the trade balance figure, fundamental for the dollar devaluation and especially the widening of the deficit in recent months. On February 9th, inventories will anticipate the much more important inflation data of February 14th. A leap forward of the CPI would put pressure on interest rates that are still close to 3% on the 30-year maturities. At the same time, a rising inflation would force the FED to accelerate the rise of rates. On February 15th, producer prices, Phily Fed and industrial production will be published. On February 21st, focus on the publication of the minutes of the Fed, while on February 27th and 28th consumer confidence and fourth quarter GDP respectively.

Euroland

Concerns about a too strong Euro are putting the ECB in troubles as the beneficial effects of the economic growth are neutralizing due to the deflationary effects of the dollar devaluation. According to a study by the ECB a few years ago, a strengthening of the Euro by 10% leads to a decline in inflation of around 0.4 / 0.6% over a period of 24 months.

 The most interesting data to follow in Europe in February will be on February 5th, the PMI data, on February 14th the GDP of the fourth quarter, on February 20th the ZEW index, on February 22nd the IFO index and finally the inflation rate on February 23rd.

Japan

The main data coming from Japan in the coming month will be represented by the GDP of the fourth quarter (on February 14th), industrial production (on February 15th) and inflation (on February 23rd).

G20 Monetary Policy

Monetary policy appointments among the other G20 economies:

- India and Brazil (February 7th)

- Mexico (February 8th)

- Russia (February 9th)


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