The EURUSD has continued to reach fresh new highs for the year, breaching above 1.1900 a level not seen since April 2015. The main driver behind the EURUSD rally is the Fed as they have indicated current economic conditions are supporting another rate hike. So, in essence, this move is not about euro strength, but more about dollar weakness. The ECB is also expected to take a decision on the future of its QE bond buying program. So, there has been speculation that Mario Draghi will announce this autumn to unwind the 2.3 trillion euro bond buying program.
Monthly Forex News Events that Might Affect EURUSD Volatility – Sept 2017
The market focus is now shifting to a new month – September which can provide us with plenty of fundamental drivers that can impact the market volatility and the EURUSD exchange rate. The month of September is set to be a very active month if the current level of volatility will persist, and we can expect even more volatility as now the summer is over and many traders return back to their desks. The curious thing is that September seasonal pattern sees the US dollar falling even further so we don’t have reason to expect the current rally to end anytime soon unless a full-scale risk aversion kicks in, which will be bearish for EURUSD exchange rate. The German election will almost certainly add more spice to the month. So watch out!
The seasonal pattern only gives us the tendency of a particular currency to exhibit a certain behavior at a certain time, so we have to carefully monitor the pattern and how the fundamental forces interact with the price action. Going forward, we’re going to analyze and disseminate the major news event for the upcoming month that can be the catalyst for higher EURUSD volatility.
“Don’t risk significant money in front of key reports, since that is gambling not trading.” Paul Tudor Jones
Monthly Forex News Events that Might Affect EURUSD Volatility – Sept 2017
EURUSD Risk Events
In September we have two main risk events. Firstly, we have the Fed interest rate decision which probably is the last chance for the Fed to signal its intention to stay on track for one more rate hike or to adopt a dovish stance. Secondly, we have the ECB, which can give us some hints on its monetary policy and the QE program. With inflation picking up and the EUR/USD exchange rate moving higher there are high chances the ECB president Mario Draghi to give hints in regard to the start of the tapering process.
- Friday, September 1, 2017 – First day of the new month will bring the NFP job report, which can be the catalyst for some trend development. We already had two consecutive readings above 200k, but we really need a good number to suggest the Fed will follow through with another rate hike. The unemployment rate is also at 4.3%, a level not seen since before the 2007 crisis.
- Tuesday, September 5, 2017 – The EU GDP figures will us more insights into the health of the EU economy. The EU economy expanded by 0.6 in the second quarter and currently stands at 2.2% having one of the fastest growth rates among developed economies.
- Thursday, September 7, 2017 – The ECB rate decision is probably going to set the tone for the EUR/USD exchange rate for the rest of the month. Most Wall Street economists believe the ECB is more likely to give some hints about the future of its QE program.
- Wednesday, September 13, 2017 – The US PPI figure is another risk event we need to keep an eye on. The PPI figure is Fed’s preferred measurement of inflation. After hitting a high of 2.5% in May inflation has dropped since then significantly to 1.9% below the 2% Fed inflation target.
- Friday, September 15, 2017 – The US Retail Sales recorded their biggest gain in July, hitting a 7-month high. The growth in consumer spending should be reflected also in the GDP reading for the second quarter, which is expected to be revised higher.
- Wednesday, September 20, 2017 – The Fed interest rate decision is the most anticipated risk event of the month. Even though the Fed is expected to keep rates unchanged what counts the most is Fed’s rhetoric and whether or not it will leave the door opens for another rate hike this year.
- Sunday, September 24, 2017 – German federal elections are another risk event that we need to keep an eye on. Recent polls show Angel Merkel holding power and winning a comfortable majority against her rival Martin Schulz.
- Thursday, September 28, 2017 – The US GDP figures is the last risk event for the month. The US economy grew at an annual rate of 2.6% and recent economic data are supportive for a better GDP reading and possibly a revision higher of the 1.4% growth rate in the second quarter.
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