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.
Fed’s Hawkish Stance on Inflation
Last week’s major highlight was the US Federal Reserve’s more hawkish rhetoric on combating inflation, as revealed in the recent meeting minutes. This stance provided a minor boost to the US dollar. Despite this, the CME FedWatch tool indicates that the majority of market participants still anticipate the first rate cut to occur during the Fed’s September meeting. This divergence between the Fed’s hawkish tone and market expectations underscores the ongoing uncertainty and complexity in forecasting monetary policy moves. The expectation of a rate cut is influenced by various economic indicators, suggesting that the market believes inflationary pressures may ease enough to justify a reduction in rates by then.
RBNZ Policy Release and Its Impact on the Kiwi
Another significant event last week was the policy release by the Reserve Bank of New Zealand (RBNZ). The RBNZ maintained its Official Cash Rate at 5.50%, aligning with widespread expectations. However, the Rate Statement contained a minor hawkish surprise, with language suggesting a vigilant stance on rates and inflation. This unexpected tone provided a slight boost to the New Zealand dollar (Kiwi). The RBNZ’s emphasis on controlling inflation and maintaining economic stability reassured investors, leading to positive sentiment towards the Kiwi.
The UK and Canadian CPI
Two other crucial data releases last week were the UK and Canadian Consumer Price Index (CPI) figures. Canadian inflation matched expectations precisely, showing stability in the economic indicators. On the other hand, UK inflation declined at a slower pace than anticipated by the market, which provided a boost to the British Pound. The slower-than-expected reduction in UK inflation indicated persistent price pressures, thereby supporting the Pound as investors adjusted their expectations for future monetary policy actions by the Bank of England.
Last Week’s Data Releases
- US Revised UoM Consumer Sentiment: Came in slightly higher than expected, suggesting a modestly improved outlook among US consumers.
- UK Retail Sales: Significantly underperformed, showing a month-on-month decline of 2.3%. This sharp drop indicates potential issues in consumer spending and overall economic health in the UK.
- Flash Services/Manufacturing PMI in USA, Germany, UK, and France: Mostly exceeded expectations slightly. This suggests a marginally stronger performance in these key economic sectors across major economies.
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.
