In Forex trading, your success is highly affected by the choices made regarding which assets to trade and in which direction rather than the specific methods employed to determine trade entries and exits. Therefore, as we commence a new trading week, it becomes imperative to take a step back and assess the bigger picture, considering the forex news shaped by macro fundamentals, technical factors, and market sentiment.
According to Daily Forex, here are a few insights and potential trends to keep an eye on in the forex market.
Increased Volatility Marks Forex Market Activity
Last week witnessed a notable uptick in directional volatility within the Forex market, a departure from the relatively calm conditions observed since the onset of 2024. While volatility had remained subdued in the earlier part of the year, recent weeks have seen a discernible increase in market fluctuations, indicating a shift in trading dynamics.
Speculation Mounts Over Fed’s Monetary Policy
The enduring resilience of the US economy, coupled with indications that inflationary pressures are not receding as anticipated, has sparked heightened speculation regarding the Federal Reserve’s monetary policy trajectory. There is growing sentiment that the Fed may delay potential rate cuts until late 2024 or even extend into 2025. This speculation is reinforced by Federal Reserve Chair Jerome Powell’s remarks during his congressional testimony, where he emphasized the need for sustained progress in addressing inflationary concerns.
ECB Maintains Rates Amidst Lowered Inflation Outlook
An essential highlight from the previous week was the European Central Bank’s policy meeting, where interest rates remained unchanged, aligning with market expectations. However, the ECB opted to revise its inflation forecast, signaling a more cautious outlook on price stability. This adjustment in inflation projections has fueled speculation about the possibility of future rate cuts by the ECB, injecting a degree of optimism into the market regarding monetary policy adjustments.
Last Week’s Data Releases
- Swiss CPI (inflation) data: Revealed a slight uptick, surpassing expectations with a month-on-month increase of 0.6%, compared to the anticipated 0.5% rise. This unexpected increase suggests potential upward pressure on prices within the Swiss economy, which could influence monetary policy decisions and market sentiment.
- Speech from the Governor of the Bank of Japan, Ueda: Remarks from the Governor of the Bank of Japan, Ueda, contributed to strengthening the Japanese Yen. His commentary indicated that the Bank of Japan is observing sufficient wage inflation, signaling a potential shift away from its ultra-loose monetary policy stance.
- US ISM Services PMI: The US Institute for Supply Management (ISM) Services Purchasing Managers’ Index (PMI) data was largely in line with expectations, reflecting stable conditions in the US services sector.
- Australian GDP: Australian Gross Domestic Product (GDP) data met expectations, indicating no significant deviation from anticipated economic performance.
- US JOLTS Job Openings: Job Openings and Labor Turnover Survey (JOLTS) data for the US labor market was in line with expectations, reflecting stable conditions in job opportunities.
- US Unemployment Claims: Unemployment claims data in the US matched expectations, indicating consistency in the labor market’s performance.
- Canadian Unemployment Rate: The Canadian Unemployment Rate data aligned precisely with expectations, revealing a minor increase to 5.8%.
Disclaimer
The news presented on Prime Codex is solely those of the analysts quoted. They do not represent the opinions of Prime Codex on whether to buy, sell, or hold specific pairs. Traders are advised to conduct their independent research before making an investment decision.
