Recent “green shoots” have pushed multiple USD crosses to the extreme bearish edges of their current trading ranges, and, in the case of AUD/USD, to a new 2009 high. However, there has been a distinct lack of follow through in subsequent trading sessions despite low summer volumes keeping chart movements volatile, and therefore currencies continue to consolidate at this psychologically important level, building pressure for potential breaks, continuation or reversal, of these ranges.

Current market sentiment sees a fine balance between risk aversion and risk seeking, with this balance maintaining a powerful grip upon the forex trading market. Within the past several weeks, such drivers as commodities prices and corporate earnings have merely shoved most currencies up and then down within their current trading ranges, and even the most shocking earnings (e.g., Microsoft −29%) have not been able to unseat that balance.

Within this environment, Friday, 31 July, looms with interesting forex trading potential. No fewer than four of the world’s major economies have primary or significant fundamental announcements scheduled for a 3.5 hour time slot, and the combination could prove sufficient to force USD from those consolidation ranges.

In order of scheduled release, these announcements are:

The Eurozone’s first estimate of July CPI prints 9:00 AM GMT (7:00 PM Canberra time), and markets widely anticipate a decline of −0.4% y/y. June unemployment prints at the same time, and the expectation is for a rise to 9.7%. The CPI is likely to be the dominant figure, and if it surprises to the upside (stronger upward price pressures) that would be bullish for EUR against USD.

At 9:30 AM GMT (7:30 PM Canberra time) in Switzerland, the July KOF leading indicator is expected to improve to −1.45 from −1.65 previous. This indicator attempts to predict Swiss GDP eight months into the future and therefore it tends not to move markets strongly upon release; however, any reading significantly distant from that expectation could serve to amplify any movement already underway.

At 12:30 PM GMT (10:30 PM Canberra time) Canada’s May monthly GDP, although late as usual, still retains the ability to affect CAD movement. Markets anticipate a contraction of −0.3% m/m, following on −0.1% previous. Should this surprise to the downside, the loonie could sell off from its current strength, particularly against AUD.

Finally, U.S. 2Q2009 GDP also prints 12:30 PM GMT (10:30 PM Canberra time). Markets widely anticipate a decline of −1.5% annualised, a decided improvement from −5.5% previous, although such an outcome would represent merely a slowing of the former precipitous descent rather than any initiation of true recovery.

Part of the U.S. GDP announcement, of course, is personal consumption expenditures (PCE), which measures sales of services as well as consumer and durable goods. With the U.S. consumer clearly in no mood for spending, the PCE is expected to print −0.5% q/q, with core purchases (ex food and energy) registering a 2.3% q/q rise.

As USD remains a safe-haven currency this GDP print is likely to be another of those counterintuitive fundamentals: a strong result could see USD weakening against growth currencies such as AUD, whereas a disappointing result could see USD strengthening on risk averse flows. Forex traders are advised to watch their stops and enjoy the ride.