We’ve written many articles about the virtues of technical trading. Technical trading removes much of the emotion that tends to plague traders and leaves the strategy building to pure numbers. The problem with technical trading is that sometimes news moves the markets in ways that technical indicators cannot predict. Forex trading is not done in a bubble, and there are times, like this week, where there are many factors that can move the market, and it would be prudent for traders (even pure technical traders), to keep an eye on the news. The coming week is just such a week. Here are some market-moving events to look for in the week ahead.
1 – The conclusion of earnings reports. Strong earnings in Europe have kept European indexes rallying for the fourth consecutive week and have renewed investor optimism. In the United States, approximately 16 percent of the S&P 500 has released its earning reports and 81.5 percent of those reported better-than-expected earnings. The coming week will see some of the most interesting reports, including those of FAANG stocks whose volatility has recently made headlines. Other tech giants including Intel and Microsoft will also be releasing their earnings this week.
2 – The Japanese central bank meeting. Japanese Prime Minister Shinzo Abe has been under fire recently for alleged cronyism, and his prospects for staying in public office look dim, despite his widespread economic success. Japan’s central bank will meet this coming Thursday and Friday to discuss whether it will step away from the current ultra-loose monetary policy. All eyes should be on BOJ Governor Haruhiko Kuroda whose announcement will offer insights into how the country could react if Abe is unseated. If Kuroda announces that the current policy will remain in place, Abe’s departure may not be as traumatic as it would be in the midst of significant economic changes.
3 – Announcements about Mnuchin’s potential visit to China. Rumors began swirling over the weekend that U.S. Treasury Secretary Steve Mnuchin would visit China to try to resolve the U.S.’s trade rift with Beijing. Mnuchin announced during the International Monetary Fund and World Bank spring meetings in Washington that “a trip is under consideration.” Though Mnuchin did meet with China’s new central bank governor during the conferences last week, their talks focused mostly on issues unrelated to the trade war.
China has threatened steep retaliation if the U.S. pushes Trump’s proposed tariffs forward, and IMF Managing Director Christine Lagarde has warned that the brewing trade war would have no winners.