Friday saw the euro and European stocks sink as investors fretted over a potential recession in the single currency bloc after the latest PMI data there missed expectations quite badly. Yields fell further as investors piled into safe-haven bonds. It came after the Fed revised down its growth forecasts and suggested rates would remain low for even longer than expected. Although stocks on Wall Street initially rose as investors welcomed the news, Friday’s sell-off in Europe weighed on US equities. Things could turn uglier in early next week for stocks, although with all the major central banks being dovish the downside could be limited in the medium term. But after an eventful week, next week is understandably quieter from a data point of view. However, the ongoing Brexit situation should keep traders busy all week, while the Reserve Bank of New Zealand will garner some attention as it is the sole major central bank meeting next week.

Brexit extended

The UK was meant to officially leave the EU with or without a deal next Friday, March 29. But the deadlock in parliament meant an extension was required. The EU agreed to delay the Brexit date until 22 May but only if Theresa May's deal is approved by MPs in the next week. However, if MPs reject May's deal yet again, then the UK will have a shorter delay of April 12, by which date it must tell the EU what it wants to do next. A third rejection of May’s divorce bill would further raise the prospects of a no-deal Brexit, which could be pound-negative.

Will RBNZ join dovish central banks?

Despite the RBA joining the Fed and ECB in delivering dovish assessments of the economy and interest rates outlook, the RBNZ was more neutral at its previous meeting last month. In February, we learnt that Q4 was a disappointing quarter for jobs but a good one for retail sales. This month we had some mixed-bag data, although quarterly GDP came in at a good +0.6% after a disappointing +0.3% in Q3. Overall, though, not a lot has fundamentally changed in New Zealand, but the RBNZ may want to align itself closer to the other major central banks, or risk accepting a higher exchange rate. So, don’t be surprised if the RBNZ becomes the latest central bank to turn decidedly dovish.

Next week’s data highlights:


  • German Ifo Business Climate


  • US Building Permits and CB Consumer Confidence


  • RBNZ
  • Canadian trade balance


  • ANZ Business Confidence
  • German Prelim CPI
  • US Final GDP


  • UK Final GDP
  • Eurozone Flash CPI
  • Canadian GDP
  • US Core PCE Price Index, Personal Spending and Chicago PMI

Overall, the upcoming week’s data releases are unlikely to be too significant in terms of market impact. However, Brexit and the upcoming RBNZ decision have the potential to cause volatility in the GBP and NZD, respectively. Meanwhile we may also see further adjustments to a significantly more dovish outlook from the Fed last week, which may mean renewed weakness for the dollar and strength for metals. Stock market participants must weigh the impact of bad data on future rate hikes (bullish) against the potential for disappointing earnings (bearish).

Risk Warning Notice Foreign Exchange and CFD trading are high risk and not suitable for everyone. You should carefully consider your investment objectives, level of experience and risk appetite before making a decision to trade with us. Most importantly, do not invest money you cannot afford to lose. There is considerable exposure to risk in any off-exchange transaction, including, but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of the markets that you are trading. Margin and leverage To open a leveraged CFD or forex trade you will need to deposit money with us as margin. Margin is typically a relatively small proportion of the overall contract value. For example a contract trading on leverage of 100:1 will require margin of just 1% of the contract value. This means that a small price movement in the underlying will result in large movement in the value of your trade – this can work in your favour, or result in substantial losses. Your may lose your initial deposit and be required to deposit additional margin in order to maintain your position. If you fail to meet any margin requirement your position will be liquidated and you will be responsible for any resulting losses.

Feed news

Latest Forex Analysis

Editors’ Picks

EUR/USD extends its gains toward 1.1300 after the dovish Fed decision

EUR/USD has extended its gains after the Fed opened the door to cutting interest rates, stating that uncertainties have increased. Markets are awaiting EU leaders to divvy up top jobs.


GBP/USD holds onto gains after retail sales, ahead of the BOE

GBP/USD has extended its gains above 1.2700 after the Fed opened the door to rate cuts. UK retail sales fell by 0.5% in May as expected. The BOE's decision and two more rounds of the Conservative contest await traders.


USD/JPY tumbles to fresh multi-month lows in tandem with a slump in US bond yields

The USD weakens after the Fed opened doors for rate cuts by the end of 2019. Bearish traders further took cues from the ongoing slump in the US bond yields. BoJ’s decision to maintain status-quo fails to provide any respite for the bulls.


FOMC: Prelude to a rate cut?

The Federal Reserve added little new to its policy prescript in Wednesday’s FOMC statement and economic projections and with the anticipation for a July rate cut long priced into market levels the reaction was decidedly uninvolved.

Read more

Gold: Bulls target 2014 top, overbought RSI doubts the rise

With the global risk-aversion wave fueling Gold prices to the highest since March 2014, the yellow metal aims for that year top during additional upside. However, overbought RSI can trigger the pullback moves.

Gold News