By Russell Glaser – Fundamentally, this may very well be the most important week of the year for the FX markets.
Already today the Royal Bank of Australia raised interest rates 25 basis points to 4.75%.
Later today will bring the mid-term elections in the US and it looks as though the Republicans will come away with the House of Representatives and weaken the majority the Democrats hold in the Senate. Also more than half of the governorships are up for grabs. A republican victory could impact Congress’s upcoming debates which include an extension of the Bush tax cuts and an extension of unemployment benefits.
Wednesday will have what everyone is looking forward to, the announcement by the Fed to renew quantitative easing to raise inflation and lower unemployment numbers. Economists are expecting that the Fed will purchase approximately $500 Billion worth of 2 year, 10 year, and perhaps 30 year treasuries.
Thursday brings Central bank meetings from both England and the EU. The markets will be looking for signs that the EU will begin to scale back on their sovereign bond purchases.
Friday will have the Bank of Japan meeting with expectations for the BOJ to address the new quantitative easing in the US along with the strengthening of the Yen. The all-important US Non-Farm Payrolls will end the week with high volatility. The report should show the US economy added 65 thousand jobs in the month of October.
Speculations continue to run as to how traders will react to the further loosening of monetary policy in the US.
Despite short term technical indicators that show the EUR/USD overbought, the pair could rise to the downward sloping trend line on the monthly chart the near the 1.4550 level.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
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