The EURUSD rallied to fresh 2.6 year high a move that was partially driven by the ECB signals that it can start tapering its massive 2.3 trillion euro bond buying program and partially because of weaker US economic data and lower US inflation. The US Dollar index also dropped to a 13-month low a move that was triggered on the back of the Fed dovish tone in regard to the inflation forecasts. The focus now is shifting to the month of August which can provide us with plenty of fundamental drivers that can impact the market volatility and the EURUSD exchange rate. The month of August is set to be a very active month if the current level of volatility will persist, but we still need to be aware of the summer trading conditions which can impact the market volatility. The seasonal pattern for August sees the EUR/USD exchange rate moving aggressively to the downside. The probabilities are that EUR/USD will give back some of the recent gains and retrace. 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 EUR/USD 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 – August 2017

The month of August will certainly bring the same level of anxiety among traders as we had in the previous month and this alone can be the catalyst for the EURUSD to exhibit higher volatility. The two main risk events are the Fed interest rate decision which is highly expected to hold rates while on the other side of the monetary policy spectrum we have the ECB interest rate decision. Both major central banks will need to clarify further their monetary policy stance and more insights are expected into the timing of the ECB tapering process.

• Monday, August 1, 2017 – First trading day of the months kicks off with the EU GDP figures. The EU economy grew by 0.6% in the first quarter at an annualized rate of 1.9%. The IMF has upgraded his GDP forecast for the euro zone by 0.2% to 1.9% for 2017.
• Friday, August 4, 2017 – The Non-Farm Payrolls Report is one of the most awaited figures especially for Forex traders. The US added 222k new jobs in June and it’s expected to only add 180k new jobs in July. The unemployment rate inched higher by 0.1% to 4.4%, but based on the market consensus it should drop back to 4.3%. The Average Hourly Earnings missed market expectation and saw a set back increasing only by 0.2%.
• Thursday, August 10, 2017 – The US PPI inflation figure is the Fed’s preferred measurement of inflation. The PPI inflation figures have slowed down which has prompted the Fed’s dovish tone. In the PPI inflation figure only modestly grew by 0.1% and the market consensus is for no change in the inflation for July.
• Tuesday, August 15, 2017 – Germany GDP figures are scheduled to be released. Germany economy grew by 0.6% in the first quarter at an annualized rate of 1.7%. Based on the IMF forecast the GDP should grow by 1.8% in 2017.
• Wednesday, August 16, 2017 – The FOMC minutes should give us more clues as to why the Fed has turned dovish on its inflation outlook and also more insights will be provided into the Fed’s timing on when the balance sheet unwinding process will start.
• Friday, August 25, 2017 – The annual Jackson Hole Symposium will gather together central bankers, finance ministers and financial market participants from around the world. Any headlines coming out of Jackson Hole have the potential to disrupt the market volatility.
• Wednesday, August 30, 2017 – The US preliminary GDP figure is the main risk event. The US economy has surprised the market and beat the market expectation after it posted a 1.2% annualized rate. According to the IMF forecasts the US economy is only expected now to grow by 2.1% versus 2.3% previous forecast.