The week ahead will be governed by two important economic events scheduled on both sides of the Atlantic. The ECB (European Central Bank) is announcing its interest rate decision on Thursday 2nd October 2014, and the all-important US Non-Farm Payroll (NFP) numbers will be announced together with the Non-Farm unemployment rates on Friday.
Simply mention the two releases and traders know that the most likely outcome for the whole trading week should be ranging markets, until Thursday in the London session. Then high volatility is to be expected until London traders go home late on Friday evening.
The ECB interest rate decision should come with no surprises as there is no rate cut expected to be announced. With that being said, the focus will be on the press conference scheduled to start 45 minutes after the interest rate decision is released. These press conferences tend to be unpredictable, especially when it comes to the Q&A sessions.
This outcome will be eagerly anticipated by market participants. Their focus will be on the ECB to announce or give any clues regarding the possible launch of any QE (Quantitative Easing) program in order to fight low inflation in the Euro-zone area. If one is proposed, then the EURUSD should virtually melt below the 1.25 level.
However, trading is not only about a single currency but a currency pair. What happens in the United States is equally important. Wednesday will provide a glimpse into the ADP numbers (private payrolls the US economy created in the previous month), and this should provide an indicator about what should be expected from the NFP on Friday.
In Summary, what should start as a slow-moving week will end up being a highly volatile one. The holiday period is well behind us now and market flow is back to normal levels. Keep in mind that all markets will do in the first part of this week, is preparing for the ECB and NFP. Those will be the real movers this week.
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Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
