Forex market volatility has remained high, but many of the major currency pairs have simply range-traded between key support and resistance levels. Event risk for the US dollar, British pound, and Canadian dollar will pick up quite a bit this week, providing potential for breakouts across the majors.

Bank of England Meeting Minutes – November 19

The Bank of England’s meeting minutes tend to be a huge market-mover for the British pound upon release at 4:30 ET, and this time is unlikely to be any different. During the November meeting, the BOE’s Monetary Policy Committee unexpectedly slashed the Bank Rate by a whopping 150bps to a 53-year low of 3.00 percent. This came on the tails of the BOE’s participation in the October 8 coordinated rate cuts, during which they reduced the Bank Rate by 50bps. The key to trading this release will be to gauge the vote count, as indications that the decision to cut rates was unanimous and if the MPC’s discussion sounds dovish or notes deflation risks, the British pound could pull back sharply.

US CPI, Federal Reserve Meeting Minutes – November 19

On November 14, Federal Reserve Chairman Ben Bernanke said that “monetary policy actions have not resolved the ongoing strains in financial markets, including interbank funding markets…Central bankers and other policymakers around the world must continue to work together to address disruptions in credit markets and to promote a vibrant global economy.” Mr. Bernanke’s comments suggest that the market’s expectations that the Fed will cut interest rates further may be correct, with Credit Suisse overnight index swaps fully pricing in a 50bp reduction on December 16. News on November 19 may shake up these forecasts, as US CPI and the Federal Open Market Committee (FOMC) meeting minutes from October 29 will both hit the wires. At 8:30 ET, CPI is anticipated to plunge 0.8 percent during the month of October, which would mark the sharpest drop since 1949, while the annual measure is projected to slip to a 5-month low of 4.1 percent. However, the FOMC meeting minutes at 14:00 ET could draw more attention, especially if they highlight the downside risks to growth and declining inflation expectations. Since risk trends have been the primary driver of price action lately, it will likely be best to watch for the stock market’s reaction as pessimistic turn in sentiment could lead equities lower, and thus lead the US dollar higher given their negative correlation.

UK Retail Sales - November 20

UK consumer spending is anticipated to have slowed in October, as retail sales are forecasted to fall 0.9 percent upon release at 4:30 EDT on Thursday, dragging the annual rate to a nearly 2-year low of 1.4 percent. The latest BRC retail sales numbers support the case for such a move, as their measure of same-store sales plunged 2.2 percent in October from a year earlier. However, this is not always the most reliable leading indicator, and the BOE has said in the past that they may focus more on private surveys over government statistics, as the latter tends to be extremely volatile. As a result, traders should keep in mind that regardless of this upcoming number, the BOE likely still holds a bearish view of UK consumer spending.

US Treasury Secretary Paulson to Speak on Economy, Markets – November 20

As we saw on November 12, comments by Treasury Secretary Henry Paulson can be extremely market-moving, and as a result Mr. Paulson’s 18:30 ET speech should be watched. He is scheduled to speak about the economy and markets, and thus, is unlikely to mention sweeping changes to TARP like he did last week. Nevertheless, his outlooks for the financial markets and US economy could have an impact on risk trends, with bearish rhetoric likely to weigh heavily on carry trades and propel low-yielding currencies like the US dollar and Japanese yen higher, while more optimistic forecasts could send these currencies lower.

Canadian CPI – November 21

At 7:00 ET on Friday, Canadian CPI for the month of October is anticipated to slip 0.3 percent during the month while the annualized pace is forecasted to hold steady at 3.4 percent, while the Bank of Canada’s core CPI measure may actually rise to 1.9 percent from 1.7 percent. Given the sharp drop in commodity prices since the summer, there is potential for weaker-than-expected readings. However, if core CPI does indeed rise in line with or more than expectations, the Canadian dollar could rise on speculation the Bank of Canada will leave rates unchanged through the end of the year, though Credit Suisse overnight index swaps are almost fully pricing in a 50bp reduction on December 9.

Jamie Saettele is a Technical Currency Analyst for FXCM.