FX: 10 Key Events to Watch this Week | DZHI - DZH International 

FX: 10 Key Events to Watch this Week

  • Kathy Lien
  • 21 May 2019
Daily FX Market Roundup May 20, 2019
Mark your calendars. This week should be another busy one for currencies as economic reports will take a back seat to headline risk. Sino-US relations remain a key focus but we'll be on the lookout for central bank comments. We are scheduled to hear from the heads of the US, UK, Eurozone and Australian central banks - all of them have topics related to the economy or monetary policy.
Here are the 10 key events to watch this week (in order of release)
  1. Fed Chair Powell speech on Monday evening at the Atlanta Fed Financial Markets Conference
  2. RBA Minutes & Governor Lowe's speech on "The Economic Outlook & Monetary Policy" Monday evening
  3. BoE Governor Carney's testimony on the May Inflation Report Tuesday morning
  4. New Zealand Retail Sales Tuesday evening
  5. ECB President Draghi's Speech on Wednesday
  6. Canadian Retail Sales Wednesday
  7. FOMC Minutes Wednesday
  8. European Parliament Elections Thursday
  9. EZ PMIs Thursday
  10. UK Retail Sales Friday
Not on this list are the ECB minutes and the UK's CPI reports.   While important, Draghi's comments should be more market moving than the minutes, which will most likely echo his views. The same is possible for CPI as Carney will provide details on their inflation outlook.
EUR/USD, which had been quietly sliding lower is at the greatest risk for a big move.First, investors will be looking to Draghi for clues on the precise terms of the next round of targeted long term refinancing operations and the possibility of more stimulus. Then they'll get an updated assessment of how well or poorly the Eurozone economy is doing with the PMIs and lastly, the outcome of the European elections, which kick off on Thursday and go through the weekend. This is one election, across 28 countries for one European Parliament. By Sunday the results should be in but as of now, it's a tight race with the pro and anti-EU parties neck to neck. The big question is the level of populist support. If they earn meaningful representation, it could stall progress over the next 5 years.  
But populism may not be bad for a currency. Just take a look at Australia. This weekend's victory by Prime Minister Morrison was a big surprise because for months, the polls had shown his coalition poised for a loss. However populism is going strong, not just in the US but other parts of the world. The Australian dollar surged in response and ended the day higher against all of the major countries. While this victory removes none for the country's near term economic risks, investors viewed Morrison's re-election as positive and not negative for the currency. With that in mind though, RBA Governor Lowe could talk rate cuts tonight, which may renew the slide in AUD/USD.
Investors will also be watching Fed Chair Powell's testimony carefully to see if the escalation in trade tensions and sell-off in stocks diminished his upbeat outlook on the economy. After bouncing off 109 last week, USD/JPY is consolidating near 110. If Powell continues to believe that the slowdown is temporary and growth will rebound in the next few months, USD/JPY could break through resistance at 110.50 and make its way towards 112. However if he acknowledges the risks and sounds more cautious, we could see USD/JPY fall back to 109 quickly. As for the other events, we'll discuss them further as the week progresses.

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About the Author
Kathy Lien
Kathy Lien is Managing Director and Founding Partner of BKForex. Having graduated New York University’s Stern School of Business at the age of 18, Ms. Kathy Lien has more than 13 years of experience in the financial markets with a specific focus on currencies

Ms. Kathy Lien is Managing Director of FX Strategy for BK Asset Management and Co-Founder of BKForex.com. Her career started at JPMorgan Chase where she worked on the interbank FX trading desk making markets in foreign exchange and later in the cross markets proprietary trading group where she traded FX spot, options, interest rate derivatives, bonds, equities, and futures.

In 2003, Kathy joined FXCM and started DailyFX.com, a leading online foreign exchange research portal. As Chief Strategist, she managed a team of analysts dedicated to providing research and commentary on the foreign exchange market.

In 2008, Kathy joined Global Futures & Forex Ltd as Director of Currency Research where she provided research and analysis to clients and managed a global foreign exchange analysis team. As an expert on G20 currencies, Kathy is often quoted in the Wall Street Journal, Reuters, Bloomberg, Marketwatch, Associated Press, AAP, UK Telegraph, Sydney Morning Herald and other leading news publications.

She also appears regularly on CNBC’s US, Asia and Europe and on Sky Business. Kathy is an internationally published author of the bestselling book Day Trading and Swing Trading the Currency Market as well as The Little Book of Currency Trading and Millionaire Traders: How Everyday People Beat Wall Street at its Own Game all published through Wiley. Kathy’s extensive experience in developing trading strategies using cross markets analysis and her edge in predicting economic surprises serve key components of BK’s analytic techniques.