The Forex Week Ahead

The Forex Week Ahead: April 18th – 22nd

Sun: NZD – CPI
Tue: AUD – RBA Meeting Minutes, RBA Governor Stevens Speaks In New York, NZD – Dairy Auction, EUR – German ZEW
Wed: GBP – Average Weekly Earnings, ILO Unemployment Rate, USD – Crude Oil Inventories
Thu: GBP – Public Sector Net Borrowing, EUR – ECB Rate Decision, EuroZone Consumer Confidence
Fri: EUR – EuroZone PMIs, CAD – Retail Sales & CPI, USD – Manufacturing PMI

Overview

  • USD The US Dollar made its way higher last week, despite yet further disappointing data, supported by comments from a raft of Fed members who continue to argue the case for continuing the path to normalisation amidst growing inflation and a stronger economy. Data however is still failing to support this view with March Retail Sales printing well below expectations and March CPI missing the mark also. Not a lot in the way of key data this week for the US, with Manufacturing PMI on Friday the key print.
  • EUR The Euro softened last week on light flows ahead of next week’s ECB meeting. A disappointing EuroZone Industrial Production print for March weighed on rate though a better than expected March CPI print stemmed the flow. Traders not expecting too much from the ECB’s first meeting since the the introduction of a second TLTRO package , but will be keen to hear the banks assessment of developments since.
  • GBP In their April rates meeting the Bank Of England voting unanimously to keep rates on hold at current 0.50% levels citing potential risk to Q1 growth from the forthcoming EU referendum which they also say is making data harder to interpret and as such will be reacting more cautiously than normal. On the plus side the bank did note that the combination of stronger Oil and weaker Sterling is likely to stoke inflation and that disappointing US GDP is mitigated by a shrinking Chinese risk. Key data prints this week will be earnings and unemployment data on Wednesday.
  • JPY The Japanese Yen was broadly weaker last week experiencing diminished safe-haven demand as risk-appetite recovered over the week with the Nikkei seeing its biggest weekly gain since October 2014. Focus remains on the BOJ’s upcoming April meeting with markets gauging the likelihood of further easing from the bank in the wake of a raft of official commentary recently.
  • AUD A recovery in risk appetite last week added support for the Australian Dollar which was also bolstered by strong domestic jobs data. Australian Unemployment rate in March ticked down to 5.7% against expectations of 5.9% showing continued resilience in the domestic labour market. Despite continued strength, traders are wary of potential RBA intervention into these higher levels. RBA meeting minutes will provide further colour this week alongside RBA governor Stevens who speaks in New York.
  • CAD A return to strength in Oil prices last week has added continued support for the Canadian Dollar. The BOC kept rates on-hold at their April meeting though the accompanying statement was less neutral than last time with the bank saying weaker global growth, a less favourable US outlook and shrinking business investment would drive the economic outlook lower if not for the boost from the government’s fiscal stimulus. Domestic data focus this week will be on Retail Sales and CPI data on Friday.