Last week's overview, this week's key events

Note: This section contains information in English only.
Source: Dukascopy Bank SA
Finally one of the developed economies started raising interest rates. As it was widely expected, the Reserve Bank of New Zealand was last week's main highlight, as New Zealand policymakers adjusted their monetary policy, increasing the key refinancing rate to 2.75%, widely meeting analysts' expectations. Additionally, the central bank claimed their intentions to remove stimulus faster than initially was thought in order to contain inflation. A rate hike was inevitable, as the economy was projected to expand 3.3% in the year to March. It was not a surprise that the kiwi received a strong bullish bias, with NZD/USD soaring above 0.86, hitting the highest since April. The next stop for the pair is located at 0.8677, and with an upside breakout from the symmetrical triangle on a weekly chart, and hawkish comments from the RBNZ, the pair is expected to appreciate. In contrast, 72% of Dukascopy traders are holding short positions on the pair, and with stronger-than-expected data from the United States, pair's another rally can be delayed, and NZD/USD can move sideways before another sharp move to the upside.

Last week's top performer, however, was XAU/USD, advancing 1.61%, as Chinese industrial output soared 8.6% in February, while Ukraine's Crimean region held a referendum on splitting from Ukraine on March 16. Regarding this week, traders should pay their attention to the cable, as a bunch of important fundamental data will shake both the Sterling and U.S. Dollar. On the 4H chart the pair is still trading in boundaries of the double top pattern that was formed on February 5; however, the pair is approaching pattern's support and a 200-period SMA at 1.6589. In case the level is breached, short traders will be able to focus on a weekly S3 at 1.6507. From the upside, pair's long-term rally is limited by a weekly R1 and pattern's resistance at 1.6797.

Wednesday's budget release can be a last chance for George Osborne to boost his party's re-election prospects, while possible tax hikes and spending cuts can become a massive drag on party's popularity. Nevertheless, in case unemployment rate moves closer to 7% threshold, the Pound can rocket versus other currencies, as it will be a clear indication the Bank of England may start raising interest rates soon. While Mark Carney already pledged not to concentrate only on one economic indicator, economy's ability to create jobs will be a proof of decreasing slack.

From the other side, the world's largest economy showed surprising resilience during the last several weeks, with payrolls and retail sales surprising markets to the upside. Therefore, fundamental data support the case for the Fed to continue tapering its stimulus programme. Nevertheless, markets are already pricing in the potential adjustment to the asset-purchase programme, hence, only in case of an adjustment of more than $10 billion, the greenback will soar. A slight majority (54%) of pending orders in a 100-pip range are placed to buy the pair, and keeping in mind FOMC's resistance to take risks, and strength of the U.K. labour market, the cable can move to 1.6797 this week.
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Actual Topics

Tue, 18 Mar 2014 06:34:19 GMT

Euro little changed despite disappointing inflation

Inflation has been a key topic for speculation during the last several months, as European policymakers constantly warned about weak inflationary pressure and an existing risk of deflation.

Mon, 17 Mar 2014 08:26:52 GMT

New Zealand manufacturing on a sustained growth

The NZD/USD pair refused moving above 0.8605 even despite a rate hike from the RNZ, while the outlook for the pair is still bullish.

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