Forex Outlook – Emerging Market Currencies Drop in Focus, Fed Tapering to highlight the week

By CountingPips.com

Last week was a turbulent week in the markets with some cracks appearing in the rosy outlook for the global economy. Emerging-market currencies led by Argentina were hit hard by an economic crisis in Argentina, a political crisis in Turkey as well as concerns about growth and credit in China. (FT.com Story / Bloomberg)

It will be crucial to watch how the emerging-market shocks last week carry over into this week. We saw risk aversion where stock markets fell and investors favored safe havens like 10-Year US Treasuries, the Japanese yen, the Swiss franc and out of emerging-market currencies of India, Mexico, Argentina, Turkey, Russia.

Fundamental Outlook – Fed Tapering to highlight the week

This week’s economic calendar for the Forex market has a good number of major economic releases that will greatly affect the financial markets. The top economic release of the week will be the monthly US Federal Reserve interest rate meeting on Wednesday where the fed will announce whether they continue their tapering program for the month and provide their economic commentary. Also on Wednesday, will have the New Zealand interest rate meeting with market expectations that the NZ reserve bank will continue to hold its interest rate at 2.50%.

In addition to the interest rate meetings this week, we will see GDP reports out of the UK, the US and Canada while we will also see German employment data for January as well as the consumer price index out of Germany.

Here’s a quick rundown of this week’s major economic highlights:

Tuesday, January 28
United Kingdom — GDP report
United States — durable goods orders
United States — consumer confidence

Wednesday, January 29
United States — FOMC interest rate meeting
United States — fed QE3 decision
New Zealand — interest rate decision

Thursday, January 30
Eurozone — Germany unemployment change
Eurozone — Germany consumer price index
United States — GDP report
United States — personal consumption expenditure
Japan — national consumer price index

Friday, January 31
euro zone — consumer price index
Canada — GDP report

Please see our full calendar for a complete listing of economic events.