GDP numbers should clear the path
The market still worries about the inflation rise and the possibility of stricter policies, while FED still emphasizes that they will keep their accommodative policies. However, we have to wait and see the GDP numbers from Germany and United States to ensure what is going on in the recovery path. Let`s get to the details and see what we are waiting for in the week ahead.
Germany`s Gross Domestic Product and IFO. - Tuesday
Tuesday ahead of anything else, we have to closely follow the GDP numbers of the Euro Zone`s Biggest economy. We are not expecting any changes in the 1.7% decrease primer number for the first quarter and 3.3% contraction yearly base. Even if it is less harmful than earlier expectations, it is still negative and tells us that Germany is still experiencing an economic recession. Besides that, The Business Sentiment Index numbers also must be closely watched as this important indicator will show the current conditions and business expectations in Germany.
Since the recovery in the Euro Zone is lower than expected, and increasing inflation is supposed to make some changes in the FED policy, we are hoping to see the weaker Euro against the USD, which means return in the EURUSD chart is what we are expecting to see this week.
New Zealand and RBNZ meeting - Wednesday
New Zealand was one of the leading countries in virus elimination that helped them in their economic recovery. We expect to see them join Norway and Canada, beginning to plan rate rises. While we are not expecting any changes at the 0.25% interest rate, the markets` pricing rate rises since 2022. Reserve Bank of New Zealand probably may not go so far as just speaking about the possible tapering of bond purchasing and interest rate raising timetable.
As we can see in the chart, Kiwi was under pressure last week, and we are expecting to see a weaker currency in New Zealand, as the central bank`s policy will hold the pressure on it significantly if the pairing can breach the 0.70 level.