The data on Japan's Consumer Price Index for January are due at 01:30 (GMT+2). It is the main indicator of inflation in the country and determines the change in the level of retail prices for a particular basket of goods and services: food, transportation, utilities, healthcare, etc. It has a significant impact on monetary policy decisions. It is expected that on annual basis CPI may decline from 0.8% to 0.7%, and Core CPI may increase from 0.7% to 0.8%.
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At 00:00 (GMT+2), preliminary data on Manufacturing and Services business activity indices in Australia for February will be released. The indicators are compiled from the enterprises responses about their purchasing activities and supply situations. At the same time, the attitude of purchasing managers to the current economic situation and prospects for its further development is evaluated. It is expected that the Manufacturing PMI will decrease from 49.6 to 48.9 points, while Services PMI will increase from 50.6 to 52.4 points.
At 18:00 (GMT+2), the US Department of Energy’s Energy Information Administration (EIA) will publish a weekly Crude Oil Inventories report containing data on changes in the volume of crude oil, as well as gasoline and distillates in the United States. An increase in reserves tends to put pressure on oil prices. The indicator is expected to increase for the fourth week in a row, this time by another 3.767M barrels. The implementation of the forecast could put pressure on oil prices.
Today, the US dollar is strengthening against its main competitors – the euro, the pound, and the yen. Yesterday, the minutes of the last Fed meeting were published. Officials noted that the prospects for the US economy have improved, and its growth will continue at a moderate pace. The protocol also states that the current monetary policy is correct, which indicates that interest rates will be held at current levels.
At 14:30 (GMT+2) the Minutes of the last ECB meeting on monetary policy will be published, which may contain hints of further actions of the regulator. At the January meeting, the ECB left rates at the same levels. In the follow-up statement of the regulator, it was noted that rates will remain at current levels or lower until inflation reaches the target of 2.0%.
AUD is extremely vulnerable to various risks, and the AUD/USD pair trades near ten-year lows. After large-scale forest fires and a trade war, the Australian economy suffers from the coronavirus epidemic in China, which is its main economic partner.
On the 4-hour chart, an uptrend is forming. The instrument broke the upper border of the sideways channel formed by the borders of Bollinger Bands, the indicator cloud is greatly expanded, which indicates the likely upward trend in the short term. The MACD histogram is in the positive area, rapidly increasing volumes, the signal line crosses the body of the histogram upwards, forming a signal to open long positions. Stochastic is in the overbought zone, the oscillator lines are reversing downwards.