The Forex Week Ahead

The Forex Week Ahead: April 25th – 29th

Tue: USD – Durable Goods, Consumer Confidence, Services & Composite PMIs, NZD – Trade Balance, CAD – BOC’s Poloz speaks in New York
Wed: AUD – CPI, GBP – GDP, USD – FOMC Rate Decision, NZD – RBNZ Rate Decision
Thu: JPY – BOJ Rate Decision, CPI, EUR – German Unemployment rate & CPI, USD – GDP & PCE
Fri: CHF– SNB’s Jordan Speaks in Bern, EUR – EuroZone Unemployment Rate & CPI, USD – PCE Core, CAD – GDP

Overview

USD The US Dollar was out of the spotlight last week in the absence of any key data. Moves,whilst limited, were broadly USD positive, with the Dollar still finding support from recent Fed comments leaning towards a possible June hike. Attention now turns to the April FOMC meeting which, although not expected to see the Fed increase rates further, Bulls will be hoping sheds further light on the chances of a June hike.
EUR Draghi poured on the Dovish rhetoric at the April ECB meeting noting that rates are expected to stay at present levels or lower for an extended period with the bank ready to act further if the low inflation environment persists. Traders now turn their attention to the latest EuroZone inflation data due on Friday with the last two EZ prints having both beat expectations.
GBP A recovery in risk-appetite last week leant support to the beleaguered British Pound which sustained a second positive week as the latest Brexit polls show growing support for the UK to stay in the EU. The latest earnings and employment data showed that Average Weekly Earnings fell back to 1.8%, the lowest level since 2010, highlighting the BoE’s view that low inflation is weighing on wage-growth. Domestic data focus this week will be on GDP due on Wednesday.
JPY The Japanese Yen softened last week as a recovery in risk appetite weighed on safe-haven demand. The upcoming April 28th Bank of Japan now looms large with growing expectation of further easing to come. The meeting will be followed by the latest Japanese inflation data.
AUD The Australian Dollar continued to push higher last week, driven mainly by a fresh surge in Iron Ore price (Australia’s biggest export earner) which hit 10-month highs amid a jump in steel prices in China. The RBA April meeting minutes saw the bank citing concern about continued AUD strength amidst a broadly optimistic economic outlook though the bank did also highlight that there was room for further easing if low inflation persists.  Attention this week turns to Australian CPI data on Wednesday
CAD The Canadian Dollar continues its rampant recovery last week driven by fresh gains in Oil which, despite initial softness in response to the failed Doha meetings, was supported over the week by a Kuwaiti Oil worker strike. Canadian CPI on Friday printed well above expectations at 2.1% vs 1.7% on Core.