The Forex Week Ahead

The Forex Week Ahead: March 28th – April 1st

Mon: USD – Advance Goods Trade Balance, PCE, Services & Composite PMIs
Tue: USD – Consumer Confidence
Wed: EUR – German CPI, USD – Crude Oil Inventories, ADP Employment Change
Thu: EUR – German Unemployment Rate, EuroZone CPI, GBP – Mortgage Approvals, Consumer Credit & GDP 4Q Final, CAD – GDP
Fri: CNY – Manufacturing PMI, GBP – Manufacturing PMI, EUR – EuroZone Unemployment Rate, USD – Non Farm Payrolls, Unemployment Rate, Average Weekly Earnings, ISM Manufacturing PMI, U. of Michigan Confidence. CAD -Manufacturing PMI

Overview

  • USD The US Dollar was bolstered last week by a raft of positive Fed commentary as members espoused Hawkish views. Notably Fed’s Bullard said that policy makers should consider hiking in April amid positive outlook on inflation and the job market. Recovery in economic indicators suggests that policy tightening would avoid “overshooting on inflation”. February Durable Goods fell less than expected, underpinning positive USD sentiment. Focus now turns to PCE data on Monday, which the Fed use as a key gauge for inflation, and the March employment reports on Friday.
  • EUR The single currency traded steadily lower over the week, weighed upon by USD strength and lack of catalyst for further upside. The ECB noted in its economic bulletin that weak external demand and a slowdown in emerging markets will dampen the recovery. Focus this week turns to EurZone Inflation and Unemployment data as well as German inflation & Unemployment data.
  • GBP Sterling was knocked sharply lower over the week as fresh European terrorist attacks fuelled investor expectations of increased support for a Brexit vote in the UK’s June 23rd referendum. These moves were further extended by Hawkish Fed comments mid-week. On the data front, February Retail Sales were shown to have fallen less than expected. Domestic data focus this week will be on earnings and employment data alongside final 4Q GDP.
  • JPY JPY traded lower over the week, despite initial strength in the wake of European terrorist attacks. Latest BOJ meeting minutes showed that policy makers engaged in heated debates on the advantages and disadvantages of the negative interest rates, with one even suggesting it was preferable to roll it back. A lack of tier one Japanese data this week should leave JPY trading off risk and USD flows.
  • AUD The Australian Dollar moved lower over the week weighed upon by a stronger US Dollar and the slide in commodity prices, led by the moves in Oil. Focus this week will be on Chinese Manufacturing data which could knock risk sentiment off course with a weak print.
  • CAD The Canadian Dollar corrected lower over the week weighed upon by a decline in Oil prices which lost 4% as US crude stockpiles rose more than expected, strengthening concerns about a stubborn global glut. Domestic data focus this week will be on GDP .