Here we try to cover the key events coming up this week which are widely expected to spur volatility and move the financial markets, thereby to bring opportunities depending on trading news strategies.
We select from Wednesday’s economic calendar – ECB rate decision to focus on and try to get a binary trading opportunity from this key event, though it is highly expected that the central bank will keep the headlines of monetary policy on hold.
ECB is expected to keep rates unchanged at 1.00% despite the rising fears over fiscal and economic instability surrounding the debt-wracked region, but the central bank still favors the wait-and-see approach so far. The problem here is that ECB doesn’t face a single challenge to focus on. Even the traditional debate about growth and inflation isn’t the only or main point for the time being. Troubles in banking sector of Spain and Greece’s potential exit from the EU bloc are currently overshadowing other issues as developments in those countries could eventually lead to the collapse of the single currency unity. Hence, binary traders would digest the outputs from this meeting to decide the overall approach in addressing the string of Eurozone’s troubles. However, our strategy would remain the same, by which we will bet on EUR/USD depending on the short-term reactions in the market. The spotlight will be on Press Conference where ECB chief Mario Draghi at 13:30 GMT issues the official statement on this rate decision and on measures could be taken to disengage between growth considerations and meeting the inflation risks. The event is likely to spark a bearish reaction on the single-currency as the widely anticipated that Draghi may strike a more dovish tone which could include hints of a rate cut, deflation risks from ongoing fiscal problems(economic slowdown often dampens the inflation prospects). But that should come with a decisive tone to push market to go into shock and immediately we should buy put options on EUR/USD as may trigger a sell-off in the euro. otherwise, it will be better to stay out of the market.
Release schedule : 11:45 GMT
Source of report : European Central Bank
Address of release : http://www.ecb.int/press/pressconf/2006/html/index.en.html
We select from Thursday’s economic calendar – BOE rate decisions, which will be the main mover this day despite it is highly expected that the central bank will not touch interest rates in June. But to increase APF size or not might be the most pressing question at the upcoming meeting as well as the best scenario for catching the market off guard.
The BOE will be on focus amid ongoing forecasts that the central bank may hold the dovish tone, which speculates further stimulus measures, setting aside inflation concerns, which already declined. Adding to dovish forecasts, the final reading of UK Q1 showed unexpectedly a stronger contraction than previously estimated at -0.3%, also PMI manufacturing data released last Friday came very disappointing. The trading opportunity will occur if the members opted to expand Asset Purchase Target, known as quantitative easing or QE and stood at 325B £. This scenario would spark heavy pressures on the pound hence to activate put options immediately on GBP/USD. On the other hand, if the BoE didn’t show enthusiasm to lift assets purchases, this would be a good opportunity for Pound to rally at least in the short-term . Thus, we may buy a Call option on the mentioned pair but with a limited expiry time as the upswing’s gains could be sold quickly before the session end.
Release schedule : 11:00 GMT
Source of report : Bank of England Monetary Policy Committee
Address of release : http://www.bankofengland.co.uk/monetarypolicy/decisions.htm
The information in the above analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.