By Zac, CountingPips.com
Today, I am pleased to share a forex interview/commentary on this week’s major events and forex trends with quantitative analyst at DailyFx.com, David Rodriguez. David’s specializes in statistical studies in currency trading markets and algorithmic trading systems for the Managed Accounts Programs offered by parent company, FXCM.
There is a busy news schedule this week for the US Dollar with Wednesday’s Federal Reserve interest rate meeting and Friday’s 4th Quarter GDP release being obvious highlights.
Q: Do you feel there is a chance forex traders will see the Federal Reserve meeting having an effect on the dollar’s direction?
A: The Fed is exceedingly unlikely to make any changes in policy, but this does not rule out any post-meeting volatility. Federal Open Market Committee voting rights will rotate to several new members—those of which are perceived to be 
more hawkish than those who leave their posts. If we see any particularly notable dissents on the FOMC’s decision it could spark considerable US Dollar moves.
Q: How big of a driver can we expect the GDP release to be on the US dollar in the days and weeks ahead?
A: We have already seen through the British Pound what effects a miss in GDP results can have on a specific currency. The US Dollar should be no exception—especially as consensus forecasts call for a significant bounce in quarterly growth rates. It will be important to watch for significant surprises in GDP data.
Q: There will also be interest rate decisions out of Japan and New Zealand taking place this week with both central banks widely expected to keep rates steady. Is there anything to watch for regarding these events or are these basically non-events at this time.
A: Both the Reserve Bank of New Zealand and Bank of Japan are widely expected to leave rates and policy unchanged, but said fact does not rule out any post-event moves. The interest rate-sensitive New Zealand Dollar could particularly react to any surprising guidance on the future of RBNZ policy moves. Though the central bank is unlikely to raise rates through the near future, market expectations call for hikes in late-2011. There is distinct risk that the bank could quash such speculations and thereby force NZD declines.
Q: The EUR/USD’s uptrend persisted throughout last week and broke above the 1.3500 level with investors seemingly less worried about the sovereign debt issues in the Eurozone. With mostly minor Eurozone economic releases this week, do you feel the outlook is for more upside momentum for this currency pair?
A: We’ve thus far seen the EURUSD break its significant highs and threaten further advances. Yet early-week indecision suggests that the single currency may be running out of steam, and it will be critical to watch the next days of price action. This is particularly true given that the month of January tends to predict February-December performance with nearly 70 percent accuracy. The next week could be pivotal for Euro trends.
Thank you David for taking the time for participating in this week’s forex interview. To read David’s latest currency analysis and trading strategies you can visit DailyFx.com.
