Trading the week ahead: The ECB rate decision is a major focus [Video]

This week presents several high-probability opportunities that I’m closely monitoring. Here are the four main events to watch:

Canadian CPI (Tuesday)

The Canadian CPI print is the main event for me. The Bank of Canada has expressed concern about the impact of higher interest rates on mortgage holders, with about 50% yet to remortgage. A significant miss in the CPI data could indicate potential interest rate cuts, leading to CAD downside. This is a substantial trading opportunity, as a miss could signal a more dovish Bank of Canada stance.

UK CPI (Wednesday)

The UK CPI print is crucial due to recent strong UK PMI and GDP data. Hawkish comments from previously neutral Bank of England members suggest economic resilience. However, a miss in the CPI data could weaken the pound, presenting a potential opportunity to short the pound. This event is pivotal as it could shift market sentiment significantly.

ECB rate decision (Thursday)

The ECB rate decision is another major focus. With rates at 3.75%, the ECB has less flexibility compared to other central banks. If the ECB signals a commitment to maintaining higher rates for longer, we could see euro strength, particularly against the pound. This decision will be pivotal for future policy directions.

New Zealand CPI (Wednesday)

Following the RBNZ’s recent dovish tilt, the New Zealand CPI print is critical. A miss in this data could lead to further Aussie/New Zealand dollar buying. Conversely, a higher-than-expected print could pull back some of the recent gains. This event is essential for understanding the RBNZ’s next steps and the resulting market movements.