Market focus

During the upcoming week traders and investors look to the release of Growth Domestic Product data from the German and United States economies, at a time when the growth prospects of many developed nations is starting to improve as the effects of the COVID-19 pandemic wane.

Markets also look to a key interest rate and monetary policy decisions from the Reserve Bank of New Zealand this week, although most economists predict that no major changes are going to be announced by the New Zealand central bank.

Other highlights on the economic calendar this week include  IFO data from Germany and Core PCE, Durable Goods, Weekly Jobs, Consumer Sentiment, and Personal Income numbers from the United States economy.

Monday 24th May, US Chicago Fed National Activity

The Chicago Fed National Activity Index is released by the Chicago Federal Reserve Bank that tracks economic activity in the 7th district. The index is a weighted average of eight-five indicators based on economic data covering production and income, employment, personal consumption, housing, manufacturing, trade sales, inventories, and orders. The index is considered a key indicator of US economic growth and identifying potential inflation.

• The USDJPY pair is bearish while trading below the 108.80 level, further losses towards the 108.40 and 108.00 levels remain possible.
• If the USDJPY pair trades above the 108.80 level, buyers are likely to test the 109.10 and 109.75 resistance levels.

Tuesday 25th May, German Quarterly GDP

German Gross Domestic Product is one of the primary indicators used to evaluate the health of the German economy. Financial markets watch the release of German Gross Domestic Product closely, as the German economy is the largest inside the eurozone. The GDP figure is released by the Statistisches Bundesamt Deutschland and is considered a key indicator of economic growth and activity.

• The EURUSD pair is bearish while trading below the 1.2000 level, key support is found at the 1.2050 and 1.1980 levels.
• If the EURUSD pair moves above the 1.2000 level, buyers may test towards the 1.2245 and 1.2330 levels.

Wednesday 26th May, RBNZ Rate Decision

RBNZ Interest Rate Decision is announced by the Reserve Bank of New Zealand and is closely followed by the RBNZ policy statement. The RBNZ is not expected to cut interest or raise interest during the April policy meeting as the domestic economy still remains uncertain. If the RBNZ is hawkish about the inflationary outlook of the economy it is positive for the New Zealand dollar. If the RBNZ is dovish towards the inflationary outlook it is generally bearish for the New Zealand dollar.

• The NZDUSD pair is only bearish while trading above the 0.7100 level, further losses towards the 0.6980 and 0.6850 levels remain likely.
• If the NZDUSD pair trades above the 0.7100 level, buyers may test towards the 0.7170 and 0.7240 resistance levels.

Thursday 27th May, US Gross Domestic Product

Gross Domestic Products is the market value of all final goods and services from a nation, usually calculated on an annual basis. GDP is annualized is released by the United States Bureau of Economic Analysis, and is based on quarterly data. Because most of the report components are known in advance, the  significance and ability of the GDP report to move markets has decreased. A vigorous growth of GDP is usually related to a healthy economy.

• The USDCAD pair is only bearish while trading below the 1.2200 level, key support is found at the 1.2000 and 1.1850 levels.
• If the USDCAD pair moves above the 1.2200 level, buyers will likely test towards the 1.2260 and 1.2340 resistance levels.

Friday 28th May, US Core PCE

The Federal Reserve utilizes a measure of inflation resulting from the PCE as their primary gauge of inflation. The report is greatly valued by the Federal Reserve, mainly due to its capability of accurately forecasting inflationary pressures in the economy. An overall increase in prices may be derived from an excess take in of these high levels of production and consumption.

• The GBPUSD pair is bearish while trading below the 1.3980 level, further losses towards the 1.3900 and 1.3750 levels remain possible.
• If the GBPUSD pair trades above the 1.3980 level, buyers are likely to test the 1.4240 and 1.4380 resistance levels.