THE WEEK AHEAD
The week ahead has many fundamental news releases to look forward to, events which are sure to have traders licking their lips at the implied volatility and the numerous trading opportunities they create. Let us take a look at our top 3 picks:
1. The German Zew Economic Sentiment is due to be released on Tuesday and is regarded as a leading indicator of economic health, as it takes into consideration the outlook of investors and analysts on the health of the German economy. The figure is expected to print a 4, significantly higher than its last release of 0.5. With the EUR under fire recently and ever growing grumbling from European members, it will be of interest to see how the healthiest economy in the EU is performing. A higher than expected print will imply that the outlook for Germany and by default the EU is growing positively which would result in an appreciation of the EUR as the regions markets stabilize while a worse than expected print will sour the sentiment, confirming the recent pessimism, and resulting in a further depreciation of the EUR.
2. The FOMC Meeting Minutes are due to be released on Wednesday. The Release occurs 8 times per year and is a detailed record of the FOMC`s most recent meeting, outlining the reasoning behind their last meetings monetary policy decisions, providing insight into the factors which they took into consideration before making their decision, to hold off on any changes in this case. The factors they outlined will be heavily scrutinized going further as markets assume that an improvement in areas the FOMC was concerned about would imply a step closer to a rate increase or vice versa should concerning factors worsen. Overall the meeting minutes will serve as a guide as to which economic release and indicators to keep an eye on going forward.
3. The US Retail Sales figure is due to be released on Friday and is a measure of the change in the total value of retail sales in the US economy. This figure is regarded as the earliest and broadest look at consumer spending, indicating whether consumers are spending more or less than the previous month. The figure is expected to show an increase of 0.4%, significantly higher than the previous month, which saw the figure lose 0.3%. A better than expected print will likely see the USD appreciate, as it implies that consumers are more confident in the economic outlook of the US and their ability to make a living thus loosening their purse strings as they forgo savings to consume now. Conversely a worse than expected figure usually results in the USD depreciating as fear of the future causes consumers to tighten their purse strings.