Right away during the session on Tuesday, we have a fairly important announcement coming out of New Zealand. It is the Reserve Bank of the New Zealand two-year Inflation Expectation for the third quarter. This isn’t necessarily anything beyond a regional number, but if you have the ability or the need to trade the New Zealand dollar, recognize that a higher number of course will push the NZD/USD pair up, with the opposite also being true.
The rest of Asia should be relatively quiet, but we do recognize that the United Kingdom CPI number for July will be a significant announcement for the market. If we get better than anticipated numbers, which is expected to come in at 1.8%, this should be good for the GBP/USD pair as well as the FTSE. Both of these markets have had a little bit of a pop lately, and as a result we think buying these markets on better than anticipated numbers is probably the best way to go.
During the American session we get the US Consumer Price Index numbers as well, and those are expected to come in a 2%. Higher than anticipated numbers of course will be good for the S&P 500, the NASDAQ, and the Dow Jones Industrial Average. We also anticipate that the US dollar will be greatly influenced by this as well, especially if it comes in higher than anticipated while the British numbers come in lower. That would be very negative for the GBP/USD pair.
All things being equal, we believe that the risk appetite of the world’s markets should continue to climb, but would anticipate pullbacks in such things as the S&P 500 and other riskier assets. These pullbacks should be looked at as potential buying opportunities, as the dips in the marketplace should be supported by short-term traders going forward. Ultimately, we think that this could very well be a “buyers’ market.”
