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FxWirePro: Are you ready for ‘supernova’ Wednesday?

A volatility ‘supernova’ approaches on Wednesday, Are you positions ready to handle it,

Let’s take a look at big events of Wednesday,

  • Wednesday starts with Bank of Japan Governor Kuroda, who will be holding a press conference at 6:15 GMT to talk about monetary policies. Though it is unlikely that a policy change would be announced, Mr. Kuroda could hint on future monetary policies. The bank of Japan (BoJ) is purchasing ¥80 trillion yen worst of assets, mostly government bonds every year. Any hint of changing that in the coming days would add immense volatility in the yen-based pairs. However, since it would lead to a sharp appreciation of yen, the comments are likely to be measured.
  • As the European hour approaches, European Central Bank’s (ECB) rate decision would come due at 11:45 GMT, which would follow a press conference by ECB President Mario Draghi on monetary policies. With ECB winding up its asset purchase program last year, and with a lot of resistance among ECB policymakers against re-introducing easing measures, it would be up to Mr. Draghi to talk down the euro to help Eurozone’s exports without taking any policy measures. Talks are likely to remain dovish.
  • Just when Mr. Draghi will start his press conference at 12:30 GMT tomorrow, March inflation numbers will be published from the United States. CPI inflation is expected to pick up in March to 1.8 percent from 1.5 percent in February.
  • Just when you would think that the day can’t be more eventful, the European Council would begin its Brexit summit at 14:00 GMT, where decisions would be made on the path ahead in Brexit and to whether or not grant Britain a longer extension of the deadline. If the deadline is not extended the UK would be leaving the European Union this week on Friday.

FxWirePro’s FX outlook:

  • We are bearish on the euro against the USD but would urge readers to use options to protect against any massive volatility. If you are going along our bearish outlook on the Euro, better hold some calls to protect against.
  • We remain bullish on the pound for the week as we expect positive news on Brexit. To hedge against use out of the money options.
  • We remain bullish on yen. Expect USD/JPY to reach as low as 108.2 area.
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July 2 15:00 UTC Released

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