The Forex Week Ahead

The Forex Week Ahead: April 10 – 14th
USD Pretty much all of next week’s market-relevant developments will be skewed toward the end of the week and include top tier macro data. Politics may take a breather at least in terms of action in Congress if not rhetoric. The House of Representatives breaks for two weeks of recess. They will return to their districts and likely hear more grassroots feedback on contentious issues like failed healthcare reforms since the last district work week of February 20-24. It’s not looking good for retail sales when the March tally lands on Friday. Auto sales including parts carry about a 21% weight in total retail sales and new car dealers alone equal about 15.5% of retail sales and so the unexpected 5.4% MoM seasonally adjusted plunge in new vehicle sales to their lowest reading since February 2015 will weigh on headline retail sales probably to the tune of about 0.75% on its own. CPI figures for March will be simultaneously released on Friday and while it is not the Fed’s preferred inflation gauge, the figures will be used to translate the retail sales figures into a volume estimate independent of price effects. CPI will also be used to determine real wage growth in the simultaneously released figures for March
EUR France’s first-round of Presidential elections will be held on April 23rd and is therefore still more than two weeks away. If, as is highly likely, a majority is not secured, then the second round will be held on May 7th. If you still believe in polling despite ghastly performances over the years, then Emmanuel Macron and Marine Le Pen each hold 23.5% of the vote according to the latest poll by Elabe, and Francois Fillon trails at 19%. Another poll by Opinion Way showed Le Pen in the lead for first round voting at 26% with Macron at 24% and Fillon at 20%. The ZEW investor confidence survey fits into a broader picture of sentiment that is also captured by the PMIs and IFO business confidence metrics, and the ZEW gets updated on Tuesday. Eurozone CPI revisions to the first estimates for March will follow on Thursday.
GBP UK will update CPI for March on Tuesday. Consensus expects at least a temporary reprieve from the upward march in core inflation that began in mid-2015 and headline inflation’s climb that began a few months later. If such forces prove to be transitory, then the Bank of England should look through it in favour of paying more attention to the complicated uncertainties surrounding ‘Article 50 ‘ negotiations to exit the European Union.
JPY Japan is scheduled to release the March Economy Watchers Survey Index on Monday. The outlook index which measures household and corporate activity, and employment across the country is expected to have improved to 53, the highest reading since December 2013. Japan releases machine order data for February and machinery tool data and the PPI for March on Tuesday with expectations the PPI to have risen 1.3% YoY, the fastest gain since December 2014, and to have remained in positive territory for a third straight month.

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