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Majors, US Dollar Forecast

Forex Weekly Outlook -March 14-18

US and Japan’s Rate decision, US employment data, Philly Fed Manufacturing Index and other influential events await us this week. Here is an outlook on the major events at hand.

Federal Reserve Policy makers issued announcements to let investors know that despite pursuing QE2 as scheduled they already plan about the timing to withdraw their stimulus when necessary. Fed Chairman Ben S. Bernanke said “‘I’m thinking about the exit and I have some plans in place,” These announcement came after the improvement in the job market and growth in manufacturing signaling the economic recovery is gaining pace.

  1. Australian Monetary Policy Meeting Minutes: Tuesday, 0:30. The Reserve Bank of Australia (RBA) decided to maintain Interest rates at 4.75% declaring this is an appropriate rate for the current state of economy where consumers are more concerned with reducing debt than spending and with low inflation rates making it likely that the RBA will keep this rate for the following months as well.
  2. Japanese Rate decision: Tuesday. The  Bank of Japan’s policy board voted to keep the overnight call-rate target at zero to 0.1 % raising its assessment of the country’s economy for the first time in nine months after a surge in exports and production. Its previous assessment had said that the “recovery seems to be pausing.” The same rate is expected to be announced.
  3. Euro-Zone German ZEW Economic Sentiment: Tuesday, 10:00. The ZEW’s headline economic sentiment indicator rose to 15.7 from 15.4 in January less than the expected rise to 20.0 suggesting that analysts are confident about the recovery of the German economy. Another rise to 16.2 is predicted now.
  4. US TIC Long-Term Purchases: Tuesday, 13:00. U.S. Treasury International Capital purchases fell unexpectedly in December to USD 65.9 billion, after rising to USD 85.1 billion in November. Analysts had expected purchases of long-term securities to increase to USD 91.3 billion. Treasury International Capital purchases are expected to climb to72.3.
  5. US Rate decision: Tuesday, 18:15. In its last meeting the Federal Open Market Committee decided to keep the federal funds rate unchanged at 0.25% and to keep QE2 the $600 billion dollar asset purchase plan claiming the economy is stable and improving but not enough to call off the QE2 plan. 0.25%.
  6. UK Unemployment Claims: Wednesday, 9:30. The number of people claiming unemployment benefits in the U.K. rose unexpectedly in January by a seasonally adjusted 2,400 after dropping by 3,400 in December. Analysts had expected the claimant count to fall by 3,300. Meanwhile, the rate of unemployment was unchanged at a seasonally adjusted 7.9%.  Claimant count is expected to decrease with only 200 new claims.
  7. US Building Permits: Wednesday, 12:30. The number of permits for future housing construction fell to an annual rate of 562,000 last month, down 10.4% from 627,000 in December lower than forecasts of 575,000 permits. This drop follows a strong increase in December since builders pulled permits to avoid new burdensome regulations imposed at the beginning of the year. An increase in the number of permits to 580,000 is forecasted.
  8. US PPI: Wednesday, 12:30. Producer price inflation in the U.S. rose by a seasonally adjusted 0.8 % in January in line with expectations after rising by 0.9% in December, core PPI, excluding food and energy costs, rose more-than-expected, gaining 0.5% in January, after rising by 0.2% in December. Analysts had expected core PPI to rise by 0.2% in January. PPI is expected to increase by 0.7% this time.
  9. Switzerland Rate Decision: Thursday, 8:30. The Swiss National Bank kept its benchmark interest rate unchanged at 0.25% in the December quarter in line with expectations. The rate target range remains at 0% and 0.75% with an effective midpoint of 0.25%, and is expected to stay on hold until late 2011 since inflation is expected to remain low. In case recovery will detain interest rates will remain put even longer. The same rate is likely to be announced.
  10. US Inflation Data: Thursday, 12:30. The CPI in January increased 0.4 % following a 0.4 % gain in December. Analysts expected a 0.3 % climb. Core CPI excluding food and energy added 0.2 % following 0.1% gain in December exceeding expectations for a 0.1 % increase.  This report shows a firming in inflation pressures and points to upward pressure on interest rates.  Core CPI is expected 0.1% gain while CPI is forecasted to increase by 0.5%.
  11. US Unemployment Claims: Thursday, 12:30. The number of new claims for Unemployment filed last week increased by 26,000 to 397,000 above the 375,000 expected showing the improvement in the job market is not yet conclusive. A Labor Department official said claims generally rise the week after a federal holiday and some New England states reported more claims due to school holidays. A smaller figure of new claims amounting to 388,000 is predicted.
  12. US Philly Fed Manufacturing Index: Thursday, 14:00. Manufacturing in the Philadelphia region expanded to 35.9 in February the highest level since January 2004 exceeding expectations of 20.8. Demand for new equipment and a surge in exports are the main contributors for this encouraging rise. A drop to 29.9 is expected now.
  13. Canadian Inflation data: Friday, 11:00. Canadian consumer price index increased by 0.3% in January following a prior flat rate in the previous month while Core CPI, which excludes prices of food and energy, came in flat in January after 0.3% gain in the prior month and below expectations of 0.2% gain. Inflation in Canada is tamed, since the economy is still weak and continues to recover from its worst recession since WWII, however, recent signs all around the globe suggest that upside risks to inflation are rising amid the recent increase in energy prices. CPI is expected to gain 0.3%.

*All times are GMT.

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Anat Dror

Anat Dror

Anat Dror Senior Writer I conceptualize, design and create multi-lingual websites. Apart from the technical work, my projects usually consist of writing content for these sites in English, French and Hebrew. In the past, I have built, managed and marketed an e-learning center for language studies, including moderating a live community of students. I've also worked as a community organizer