A Pivotal Week Ahead

A busy week ahead with the big beasts of the market jungle coming out and a slew of level one fundamental releases also due for release.  This starts in earnest tomorrow in Japan with the BOJ monetary policy statement, interest rate call and press conference.  Wednesday is also a hugely important day with the MPC (monetary policy committee) minutes in the UK due out as well as the Fed Funds Rate and the FOMC statement in the US and an interest rate decision in New Zealand as well.  With so many important releases this week the markets will be both febrile and volatile as traders and investors try to position themselves on the right side of the market as well as trying to gauge the likely short to medium term outlook.   For the euro this week too could be pivotal with Trichet’s recent tough talk helping to push it higher only for the political turmoil in Ireland seeming to reverse sentiment, as the market is reminded that the debt problems at Europe’s periphery have not gone away.  However, before euro bears start to rejoice the recent pro-euro rhetoric appears to be percolating into the minds of traders at the CME which last week saw a major shift of sentiment from short to long euro positions. In addition, the market also seems to believe Angela Merkel when she said that Germany is prepared to take all necessary steps to support Europe (although she did add a small caveat that it would be “within reason”) so today’s relatively quiet start is the perfect time to consider how these factors are likely to impact the various pairs given that many are also trading at key technical points, particularly fib levels.