January 2017 Forex News Events that Might Affect EURUSD Volatility

January 2017 Forex News Events that Might Affect EURUSD Volatility

January 2017 Forex News Events that Might Affect EURUSD Volatility

The year of 2016 was indeed the year of major market shocks with many unexpected events and most of these events were political events like Brexit and Donald Trump’s victory. After an unstable and turbulent start of the year 2016, the EURUSD exchange rate stabilized and the bearish trend that started since the 2014 summer paused. The low level of volatility was the main characteristic of 2016, but 2017 looks more promising with EURUSD trading near the 2016 lows and at a new 14 years low. The EUR/USD rate was driven mainly by the central bank’s monetary policy and political developments from both side of the FX spectrum and going forward, we can expect the same drives to maintain their influence on the EUR/USD exchange rates.

Going forward, we’re going to look into the major risk event that are scheduled during the first month of 2017 which can potentially affect the EUR/USD volatility. The objective of this report is to warn market neutral traders of the impending danger dates that they need to stay out of the market.

“Don’t risk significant money in front of key reports, since that is gambling not trading.” Paul Tudor Jones

January 2017 Forex News Events that Might Affect EURUSD Volatility

Before going into the details of when these major news events are scheduled it’s important to note that usually the first month of the year can be the catalyst for new trend developments or the trends that are already in motion can be reinforced. The Fed looks ready for more tightening in 2017 and the ECB is “positioned” on the other side of the monetary policy spectrum with his massive QE program which makes the EUR/USD bearish case very appealing.

  • Wednesday, January 4, 2017 – The FOMC Meeting Minutes are scheduled to be released during the New York session and it will provide investors with more insights from the latest Fed meeting from December when the US Federal Reserve raised rates for the second time in a decade. It can be a major event as it can give traders more clues whether or not the Fed is ready to hike rates three times in 2017.
  • Friday, January 6, 2017 – Usually, the first week of each month brings the Non-Farm Payrolls Report one of the most awaited figures especially for Forex traders. The market consensus is for a flat reading of only 175k new jobs added during the last month of 2016, but the risk remains to the upside and a positive surprise in the NFP figures can be the catalyst for more EUR/USD bearishness.
  • Wednesday, January 18, 2017 – The Fed’s monetary policy and Janet Yellen press conference is another major risk event that can significantly drive higher the EURUSD volatility and traders need to be aware of.
  • Thursday, January 19, 2017 – The ECB interest rate decision is in the spot but the general consensus is for no changes in the ECB monetary policy. The ECB President, Mario Draghi during the ECB December meeting already announced and outlined the ECB plans for 2017 to reduce the asset purchases from 80 billion per month to 60 billion per month but it will only start decreasing the QE program from April of 2017. The ECB’s QE efforts are still significant as market participants were unimpressed by ECB tapering decision as they continued to sell EURUSD.
  • Friday, January 20, 2017 – The day Donald J. Trump will assume the role of chief executive of the United States. The US presidential inauguration day historically is a very volatile day for the US Dollar and this is truer today due to the uncertainty around the inauguration day. Anti-Trump protesters are planning to shut down the inauguration and any disruptive event can be the catalyst for some market volatility.
  • Friday, January 27, 2017 – The US GDP growth figures for the last quarter of 2016 are scheduled to be release. This will give more insights into how healthy the US economy really is and whether or not the US stock market rally has had any material impact on the real economy. The US third-quarter GDP growth was revised up to 3.5% gain but the Wall Street analysts are not that optimistic about the fourth quarter of 2016 as the GDP forecast ranges from as low as 1.5% growth rate to as high as 2.5% growth rate.
  • Tuesday, January 31, 2017 – The two-day Fed meeting starts which will culminate with the Fed interest rate decision scheduled to be release on 1st of February.

The political and geopolitical developments will certainly be a major contributor to the EURUSD volatility in 2017 as after Brexit and Trump’s win the political landscape, especially in the European Zone, is expected to have a major turn for the worse. The European ongoing migrant crisis and the new waves of terrorist attacks will fuel the negative sentiment towards the current political establishment and this translates into more EURUSD volatility and ultimately more trading opportunities.

Mark your calendar as these are critical events that might just rock EURUSD. It’s best to stay out of the market until these events are out and over.


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