Start your trading week right by prepping for these top-tier catalysts and checking out my potential trade setup.
Don’t forget to review which factors drove forex market price action last week, too!
Major Economic Events:
RBA interest rate decision (May 4, 5:30 am GMT) – The Australian central bank is expected to sit on its hands and keep rates on hold at 0.10% for the time being.
Still, RBA policymakers might acknowledge the recent improvements in economic data, as well as progress on the vaccination front. An optimistic outlook could be bullish for AUD since this could keep traders hopeful for an RBA hike down the line.
New Zealand quarterly jobs report (May 4, 11:45 am GMT) – A slower pace of jobs growth is eyed for the first quarter of the year at 0.3% versus the earlier 0.6% gain.
This should be enough to keep the unemployment rate steady at 4.9%. An upside surprise could bring in gains for the Kiwi, as it could put the RBNZ closer to tightening monetary policy.
BOE monetary policy decision (May 6, 12:00 pm GMT) – No actual changes to asset purchases at 895B GBP or interest rates at 0.10% are eyed.
The minutes of the meeting are also up for release, and this is expected to indicate a unanimous vote among MPC members to keep policy unchanged.
Some expect an optimistic statement from the central bank, given how the U.K. has seen a lot of progress when it comes to vaccination and has already begun to reopen the economy. In fact, there could be some hints about tapering that could push sterling higher.
Canadian jobs report (May 7, 1:30 pm GMT) – After a stellar showing in March, Canada’s employment sector could print a drop in hiring of 185K for the previous month. This might bring the country’s jobless rate up from 7.5% to 7.8%.
U.S. non-farm payrolls report (May 7, 1:30 pm GMT) – Another strong month of hiring is eyed for Uncle Sam, with the NFP slated to print a 975K increase and the jobless rate to tick lower from 6.0% to 5.7%.
Better keep tabs on leading indicators due throughout the week, including the ISM PMI readings and the ADP non-farm employment change report, to gauge how the actual government figures could turn out.
Forex Setup of the Week: GBP/NZD
GBP/NZD Daily Forex Chart
GBP/NZD has formed a head and shoulders pattern on its daily chart and appears to have fallen through the neckline support. This hints that a selloff could follow soon.
The chart pattern spans approximately 400-500 pips, so the resulting downtrend could be of at least the same size. The 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside.
However, Stochastic has been indicating oversold conditions for quite some time, so buyers might attempt to take over.
Of course this could all depend on how New Zealand’s quarterly jobs figures turn out and whether or not the BOE shifts its monetary policy stance. An upside surprise from New Zealand and a dovish tilt from the U.K. central bank might be enough to sustain a drop.