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The US dollar, British pound, and commodity dollars face potential for major moves and significant breakouts from summer ranges next week due to the combination of the post-holiday return of liquidity, rate decisions from the Reserve Bank of New Zealand, Bank of England, and Bank of Canada, along with Australian employment and US consumer confidence reports.
• Reserve Bank of New Zealand - September 9, 17:00 ET
The Reserve Bank of New Zealand (RBNZ) is still anticipated to leave the Official Cash Rate target unchanged for the third straight meeting at 2.50 percent. In RBNZ Governor Alan Bollard's last policy statement, he sounded extremely cautious on the outlook for the economy, especially because the strength of the New Zealand dollar had created additional risks. Where the New Zealand dollar ends the trading day will likely have to do with the status of one statement though: the final portion. We also saw in the last policy statement that the RBNZ maintained that it was appropriate to continue to provide substantial monetary policy stimulus to the economy and that the central bank could still lower rates modestly during the coming quarters as they continue to expect to keep the OCR at or below the current level through until the latter part of 2010. If the RBNZ eliminates the phrase noting that they could still lower rates, the New Zealand dollar is likely to surge in anticipation of rate hikes down the line. On the other hand, if the RBNZ maintains their dovish-neutral tone, the currency could slip.
• Australian Employment Change (AUG) - September 9, 21:30 ET
At 21:30 ET, the Australian net employment change may show a decline of 15,000 during August following a surprise increase of 32,200 in July. Furthermore, the unemployment rate is anticipated to edge up to 5.9 percent, the highest since July 2003, from 5.8 percent. Since the employment change tends to be a very volatile release, this should have the greater impact on the Australian dollar, with a sharper than expected drop likely to weigh on the currency and an unexpected positive result likely to push it higher.
• Bank of England Rate Decision - September 10, 7:00 ET
The Bank of England (BOE) is anticipated to leave rates unchanged at 0.50 percent on Thursday at 7:00 ET, but this won't even be the market-moving part of the announcement. Instead, traders will be looking toward the BOE's policy statement. This has consistently been the prime news event of recent rate decisions, including last month, when the BOE unexpectedly announced a £50 billion expansion to their quantitative easing program that would likely come to an end in early November. That said, with no expansion anticipated, the statement is likely to just be a straightforward announcement offering little insight, and thus, the British pound shouldn't show much of a reaction.
• Bank of Canada Rate Decision - September 10, 9:00 ET
The Canadian dollar could see a pickup in volatility on Thursday at 9:00 ET as the Bank of Canada is expected to leave rates unchanged at 0.25 percent once again. After the Bank left rates unchanged on July 21, they said that they would maintain a neutral stance through June 2010, and the rest of the statement was relatively optimistic as they revised forecasts for growth. The outlook for 2009 was revised up to -2.3 percent from -3.0 percent while the 2010 outlook was revised up to 3.0 percent from 2.5 percent. That said, the BOC has made it clear that their policy stance is contingent upon the inflation outlook, which they most recently judged as offering downside risks. If we said a reiteration of these comments and no substantial shift away from cautious optimism to more positive sentiment, the BOC's statement may not be a huge market-mover. However, if the BOC comments upon the negative impact of the Canadian dollar's strength, we could actually see the currency pull back if it reflects some potential for more verbal intervention.
• University of Michigan Consumer Confidence (SEP P) - September 11, 9:55/10:00 ET
The preliminary reading of the University of Michigan's consumer confidence index is forecasted to rise to 67.3 in September from 65.7, which would be supportive of claims to the US economy is showing signs of recovery. Indeed, based on the latest US non-farm payrolls results, the pace of job losses has slowed markedly, which may help to boost investor sentiment. That said, the major issue we want to point out with this report is that the official time of release is 10:00 ET, but it typically hits the wires at 9:55 ET, which can exacerbate any surprise factor from the actual results.
See the DailyFX Calendar for a full list, timetable, and consensus forecasts for upcoming economic indicators.
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