Just like last week, the forex trading calendar for today starts very quietly, with virtually no news in Europe other than a minor piece of fundamental news in the GFK German consumer sentiment index which came in on target at 3.2,.The only news item  of note for the US in the form of Existing Home Sales which are forecast to fall from last time to 5.95m down from 6.54m, a figure which represents the number of new home sales in the previous month which is then annualized – and should the number be better than forecast then this could be good for the US dollar although any good news effect may be tempered with the fall from last month.

Tuesday sees  raft economic and fundamental news for the euro to dollar currency pair,  with the main number to watch being the German IFO Business index which is forecast at 95.2, marginally better than last time at 95.2 up from 94.7. This is generally considered to be a leading indicator of economic health – businesses react quickly to market conditions, and changes in their sentiment can be an early signal of future economic activity such as spending, hiring, and investment, and if the number is better than expected then look for a positive reaction from the euro currency exchange rate. The principle news in the afternoon for the US currency is the CB Consumer Confidence index, another sentiment indicator, which is based on a survey of around 5,000 US households, and which asks respondents to rate the relative level of current and future economic conditions including labor availability, business conditions, and overall economic situation. The forecast is for a minor improvement on last time and once again if the number is better than expected look for a positive move in the home currency, this time the US dollar.

Wednesday sees little important fundamental news in Europe with the forex markets waiting for the main event, the FED funds rate decision and statement due in the evening UK time. It is very unlikely that there will be any change in the 0.25% interest rate, but the statement as always from the FOMC will be closely watched for any signals of future intent with regard to increasing the base rate in due course. The key will be whether the FED signal that this is likely to happen sooner than expected, or whether the flow of economic news has dampened any short term optimism. If so then expect the US dollar to weaken on the statement as a continuation of the recent short term rally in the US dollar will only be supported longer term if the prospect of higher rates sooner rather than later is a realistic expectation. If not then the dollar will continue to be the low yielding currency of the carry trade, if and until rates start to move, or at least a rate move is signalled by the FED.

Thursday sees a quiet day once again for Europe in the morning, as now doubt the currency markets and the euro to dollar will continue to react to the FED decision, with the afternoon forex trading session dominated by the Core Durable Goods data and unemployment Claims. The first is forecast at o.4% down from last time at 2.0%, with unemployment claims for the week forecast to fall to 451,000 against a previous of 482,000. The Core data is generally considered to be a leading indicator of production – rising purchase orders signal that manufacturers will increase activity as they work to fill the orders, and if better then expected then expect the US dollar to strengthen, but this could be counterbalanced by the unemployment data which could send the US dollar lower if worse than expected.

The main item of fundamental news to watch out for on Friday for the euro to dollar is of course the US Advance GDP, forecast at 4.5% against a previous of 2.2%. This is the first of three releases of the GDP numbers, the first being the Advance, the second the Preliminary, followed by the Final. The Advance release is the earliest and thus tends to have the most impact on the forex markets as it provides the broadest measure of economic activity and is a primary gauge of the health of the US economy. The number on Friday is expected to be “eye popping” so watch out for some volatile reactions in the currency markets as they absorb the details of this one!

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