Forex Weekly Outlook April 22-26

The US dollar had a positive week, riding on risk aversion. Will it continue advancing? US housing data, GDP figures from the US and the UK, Japan’s rate decision and more events will keep markets busy. Here is an outlook for the main events.

The G-20 communique gave Japan a very small slap on the wrist, and practically a green light to its policies. Will USD/JPY break 100 this week? The euro was hit by hints of a rate cut. Despite a denial afterwards, the euro remained n the back foot.  US economic data continued to falter with building permits dropping  from 0.95 million  to 0.90 million,  and the Philly Fed Manufacturing Index declined to 1.3 in March following 2.0 in February. And now, we get the most comprehensive US figure: GDP.  Let’s Start

1. US Existing Home Sales: Monday, 15:00. US existing home sales edged up 0.8% to an annual rate of 4.98 million units in February, the highest level since November 2009. This reading followed a 4.94 million units in January. Economists expected an even higher figure of 5 million-unit rate. The strong reading suggests the housing market is gaining pace. A rise to 5.02 million is expected this time.
2. US New Home Sales: Tuesday, 15:00. US new home sales declined 4.6% to a seasonally adjusted annual rate of 411,000 units, after posting an annual rate of 431,000 units, in January, still the highest level since September 2008. Analysts predicted a smaller drop to 422,000-unit rate last month. However, compared with February 2012, sales surged 12.3% indicating the housing market is in good condition. A rise to 420,000 is expected.
3. NZ rate decision: Tuesday, 22:00. The New Zealand central bank kept its benchmark cash rate at 2.5% in March, in line with market expectations. Analysts believe a rate hike is in order sometime between September and December this year. RBNZ wishes to maintain inflation around 2%. No change in rates is forecast. More:  Strong Kiwi Justified but Backfires
4. German Ifo Business Climate: Wednesday, 9:00. German business sentiment dropped in March to 106.7 from 107.6 in February halting four months of gains, indicating German businesses are still worried by the prolonged EU debt crisis. However, most economists still believe  Germany  will overcome the Eurozone recession and regain economic momentum this year. A further decline to 106.4 is predicted.
5. US Durable Goods Orders: Wednesday, 13:30. An increase of 5.7% was registered in February in demand for long-lasting U.S. manufactured goods, following a 4.9% decline in January. However, excluding transportation, orders plunged 0.5% after increasing 2.9% in January, while economists predicted a 0.5% rise. However regardless of the mixed data, the readings were in line with market expectations, indicating a growth trend in manufacturing. A smaller rise of 0.8% is anticipated.
6. UK Prelim GDP: Thursday, 9:30. British economy shrank 0.3% in the fourth quarter of 2012, indicating production was sluggish in 2012. After correcting distortions due to the Olympic Games and other factors in the third quarter, the  economic growth could best be described as flat. This weak data shows that cutting public spending is not enough to reduce budget deficit and create growth. A rise of 0.1% is forecast.  
7. US Unemployment Claims: Thursday, 13:30.  The number of Americans filing initial claims for unemployment benefits climbed 4,000 last week, reaching 352,000. Employment figures were unstable in the last few weeks; the 4-week moving average increased by 2,750 to 361,250 indicating hiring has softened, but could also be contributed to the volatility around the Easter holiday. The same rise of 352,000 is expected.
8. Japan’s Rate decision: Friday. The Bank of Japan started an ambitious endeavor to end deflation and boost Japan’s economic activity. The aggressive monetary policy includes buying massive amounts of government bond holdings valued at about 7 trillion yen, and pursue quantitative easing as long as it needed to achieve its 2% inflation target. Interest rates remained at the minimum low of 0.10%. No change in rates is expected this time.
9. US Advance GDP: Friday, 13:30. The US GDP number for the fourth quarter of 2012 disappointed with a weak growth rate of 0.4% (annualized), following a third quarter gain of 3.1%. The main reason for this low figure was a sharp drop in inventory investment a drop in government purchases. However personal consumption, nonresidential investment, and residential investment increased. An expansion of 3.1% is expected now.

That’s it for the major events this week. Stay tuned for coverage on specific currencies

*All times are GMT.

Further reading:

• For EUR/USD, check out the  Euro to Dollar forecast.
• For the Japanese yen, read the  USD/JPY forecast.
• For GBP/USD  (cable), look into the  British Pound forecast.
• For the Australian dollar (Aussie), check out the  AUD to USD forecast.
• For USD/CAD (loonie), check out the  Canadian dollar