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The main Themes for the Week ahead in Forex

1/ European PMI's: the Euro zone has been recovering better than expected, even though the last CPI numbers were disappointing and went into deflationary territory, with next week's PMIs numbers we'll see if the recovery is still intact or if it start to lose momentum, it's important also to note that Covid 19 cases are starting to rise again especially in the southern countries like France and Spain and that would weigh on consumer and business confidence, so next week's PMI's will be a great indicator to monitor the Eurozone recovery path especially after the resurgence of COVID 19 cases in recent weeks if the numbers come below 50 which is the expansion territory that could see the EURUSD heading towards 1.17 level.

2/ Governor Bailey Speech: on Tuesday governor Bailey is due to speak at a webinar hosted by the British Chamber of Commerce, the topics include the Bank of England’s decision to significantly expand quantitative easing and what further steps are needed to help kickstart economic recovery, this will be a key event for the Pound because it comes just after the BoE minutes last week where they mentioned the possibility of negative rates, it's worth mentioning that the BoE has already said that negative IR is in the toolbox but it'll be interesting to see if Mr. Bailey could reveal more details about that, Brexit headlines also will remain key for sterling traders.

3/ The Bank of New Zealand meeting: not expecting any major changes in terms of monetary policy in next week meeting, rates are expected to stay at 0.25%, but the RBNZ will hint again on the possibility of negative interest rates for next year, Covid 19 is still one of the main macro themes for the markets and the New Zealand's government has handled the pandemic very well relative to other developing countries, but overall I expect next week RBNZ meeting to be a none event and the main focus for NZD traders will be on risk sentiment, the New Zealand Dollar is known as a commodity currency and it's very sensitive to swings in Indices and commodity prices,

 

Article by Halim Haddad,

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