We believe that the Fed will not further increase its interest rate this coming week. Instead, our focus will be on the tone of Yellen. Any sign of concern from her in regards to the US economy will potentially send the US dollar down.
Similarly for RBNZ, the tone of Wheeler is key to this event. Indication that further rate cut in the future will send the NZD further down as well.
Lastly, BoJ might potentially increase its programme. While this risk event will be the highlight for the Japanese Yen , it is also crucial to focus on risk events happening in the financial market. Further uncertainty in the market can in turn strengthen the Yen.
OUR DIRECTIONAL BIAS FOR THE WEEK
- AUD & NZD neutral (a recent shift in risk sentiment) - watch out for AUD CPI and RBNZ Rate Statement
- CAD neutral (while Oil is still , BoC tone was optimistic in their last statement) - watch out any update in the Oil market.
- EUR (fundamental of EUR is still weak) - no key risk event next week
- CHF & JPY neutral (a recent shift in risk sentiment) - watch out for BoJ Statement
- GBP (fundamental data on GBP has been weak) - watch out for Prelim GDP
- USD neutral (while the FED has hike rate, there are still uncertainties in the US economy) - watch out for Fed FOMC meeting
Read our full outlook here: http://www.fxpresearch.com/market-analysis/2016/1/24/24th-january-market-analysis