Markets Poised for Volatility Ahead of a Big Week
Traders are strapping themselves in for a potential roller-coaster of a week ahead in financial markets with big data releases and key central bank decisions ahead as well as an escalation in the conflict in the Middle East adding to uncertainty over the weekend. US markets had experienced a very mixed day on Friday with the Dow taking a beating, down 1.12% on the day, the S&P dropping 0.49% and the Nasdaq jumping 0.38%. With the start of the ground invasion in Gaza, there have been no surprises for traders this morning to find Oil and Gold higher, Gold now trading above the $2,000 level.
FX Set for Big Moves on Central Bank Rate Calls
With the Federal Reserve, the Bank of England, and the Bank of Japan all set to deliver rate decisions this week, currency traders are expecting to see some good moves in their respective currencies around the events. Interestingly, none of the above are expected to change rates on this occasion but the message that we receive from their respective committee’s could see some very punchy moves in the market. Whilst the Fed is undoubtedly the most influential of the 3 in terms of market impact, FX traders will argue that the BOJ has the propensity to move its currency much more this week especially if rhetoric increases with regard to changing it’s long term ultra-easy policy.
War and Data on the Agenda for Traders Today
Traders have kicked off the week with having to deal with the ground invasion of Gaza by Israeli forces over the weekend, and although it has not been the threatened all out offensive, markets have reacted in a defensive fashion and investors will be paying close attention to updates on the newswires as the week progresses. It is a full data event week ahead as well and the day kicks off with a focus on the Australian market with the release of the Retail Sales numbers. The European session see’s the release of both German and Spanish CPI numbers and although there is little on the calendar once New York opens, traders are expecting to see more volatility today ahead of Wednesday’s FOMC announcements.
