At the start of this week, two forces appear to be converging on traders. The first is the impact of a G7 joint intervention on the forex market to lessen the Japanese yen’s volatility. Japan appears to favor a stronger currency at the moment as the increased buying power allows them to purchase reconstruction materials at a better price.
The second element is the commencement of UN-authorized aerial and naval strikes on Muammar Qaddafi’s Libyan forces. By approving a limited campaign to stem Qaddafi’s military retaliation on the rebels in Benghazi, the UN strikes have also created the conditions to shift traders in and out of riskier assets and also to drive oil prices higher through speculation of a supply disruption.
Today’s calendar events, while meaningful, will likely have less impact on the forex market than the news emerging from the above-listed global forces.
Here is a round-up of today’s events:
14:00 GMT: USD – Existing Home Sales
Previous: 5.36M. Forecast: 5.15M.
The only meaningful data release from today will be a housing figure from the United States measuring the sale of already-existing homes. The report is a leading indicator of economic health and financial recovery as the growth of the housing market has a direct correlation with multiple factors of the American economic recovery. A stronger figure should help boost the USD in the short-term.
14:00 GMT: EUR – ECB President Trichet Speaks
The European Central Bank (ECB) President, Jean-Claude Trichet, is due to testify on monetary policy before the European Parliament in Brussels today. These official testimonies are often the cause of intense volatility in EUR pairs as many investors try to speculate on future interest rate decisions based on his selection of words in describing the ECB’s position on monetary policies. No predictions on effect can be expected, but traders should expect some price swings during his testimony.