The fx market experiences constant change on a minute-to-minute, hour-to-hour, and day-to-day basis. And much of the changes are brought about by changes in economies, particularly those that are home to the world’s major currencies. A shift in interest rates, for example, could create a ripple effect not only to the country’s local currency, but also the currencies that are paired with it. The same thing goes with import and export data. Lower imports made by China could mean a weaker economy to economies that export goods there, which could then affect their respective currencies.
That is why here at FX Strategy, we help you monitor changes in the market even before they happen. Below are some of the biggest events in the forex market for this week, 1-5 April:
Event: NBS/HSBC Manufacturing Purchasing Managers Index (PMI) – China
Date: April 1, 2013
Time: 1:00/1:45am (GMT)
What It Is About and Why It’s Important
Manufacturing is one of the reasons that led to China’s economic expansion in the recent decade. Because of that, world markets constantly monitor changes in the Chinese economy as it could indicate potential changes in their own economy. And when there are changes in the economy, currencies could be affected too.
When it comes to the Manufacturing PMI, any figure above 50 is seen as a growth in the country’s manufacturing sector. The opposite is true when the number goes below 50. Naturally, countries want to see a continued growth in China’s manufacturing sector as it affects areas already mentioned above.
Update: China’s PMI increased slightly to 50.9 from the previous 50.1. This is lower than the 51.2 consensus, however.
Event: RBA Interest Rate Decision – Australia
Date: April 2, 2013
Time: 3:30am (GMT)
What It Is About and Why It’s Important
Every first Tuesday of the month, the Reserve Bank of Australia (RBA) announces its decision on the country’s cash rates. When the RBA cuts its rates, financial institutions follow suit, which could then stimulate spending in the country. This is naturally good for the Australian Dollar.
However, despite massive cuts made in the previous year, analysts are not expecting further cuts until later this year. Rates are currently at 3%.
Event: Consumer Price Index (YoY) – Germany
Date: April 2, 2013
Time: 12:00pm (GMT)
What It Is About and Why It’s Important
The consumer price index (CPI) is an indicator of the average price of consumer goods and services. A high CPI could indicate an increase in inflation, which signifies a positive outlook for the EUR. Germany’s CPI is currently at 1.5% with analysts predicting no change for this month.
Event: BoJ/BoE/ECB Interest Rate Decision – Japan/United Kingdom/EU
Date: April 4, 2013
Time: 3:00am/11:00am/11:45am (GMT)
What It Is About and Why It’s Important
Japan, the United Kingdom, and Europe are home to some of the biggest economies in the world. And with their trio of interest rate decision announcements on 4 Apr, investors holding JPY, GBP, and EUR currencies should definitely keep track of these events. The Bank of Japan (BoJ) is expected to maintain rates at near zero at 0.1%, the same for the UK which would remain at 0.5%, and the EU will also keep its rates at the current 0.75%.
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