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Majors, US Dollar Forecast

Forex Weekly Outlook April 11-15

The Japanese yen was the king in the past week, frustrating Japanese officials.  Inflation data in the UK and the US, Retail sales PPI, and Consumer sentiment in the US, rate  decisions in the UK and Canada, Employment data in Australia stand out. These are the main events on forex calendar. Join us an outlook on the main market-movers for this week.

At  a panel speech in New York, Fed chair Yellen said the US economy had made continued progress and that the labor market is “close” to full strength. Yellen also noted that inflationary pressures start to build up, hinting that the Fed will proceed with its gradual rate increases. Fed chair Yellen predecessors; Ben Bernanke Paul Volcker and Alan Greenspan former also took part at the conference expressing nearly total agreement over each other’s economic policy. Will the US growth trend continue?  Let’s start,

  1. UK inflation data: Tuesday, 8:30. UK inflation increased 0.3% in February unchanged from the previous month. The reading was lower than the 0.4% forecast. Core inflation excluding volatile goods, also held steady at 1.2%. The reading stayed well below the 2% BoE target. UK inflation did not exceed  2% since late 2013. UK CPI is expected to gain 0.3% this time.
  2. US Retail sales: Wednesday, 12:30. U.S. retail sales fell less than expected in February, down 0.1% following a downwardly-revised minus 0.4% posted in the prior month. February’s reading suggests the economy remained on solid ground despite some fears of a looming recession. Meanwhile, core inflation excluding automobiles also dipped 0.1% after minus 0.4% in January.0.1. Retail sales forecast for March is 0.4%
  3. US PPI: Wednesday, 12:30. U.S. producer prices declined 0.2% in February amid lower energy and food costs. However, prices were unchanged from a year ago, indicating a recovery. The reading followed a 0.1% gain in January. Energy prices dropped 3.4%, and gasoline prices declined 15.1% the biggest fall in a year. Nevertheless, recent manufacturing data suggests the sector is showing signs of  growth. PPI is expected to increase 0.3% in March.
  4. Canadian rate decision: Wednesday, 14:00. The Bank of Canada  kept its interest rate unchanged at 0.50% in line with market forecast. The BOC noted that the near-term outlook remains unchanged from January. The central bank lowered its economic growth projection for this year to 1.4% in January and cut rates twice last year to stimulate growth. It is likely that the BOC will wait for the upcoming federal budget’s fiscal measures this month to determine its next move.
  5. US Crude Oil Inventories: Wednesday, 14:30. Last week, US crude oil inventory plunged 4.9 million barrels to 529.9 million following a 2.3 million gain in the week before. Economists expected a 3.1 million barrels increase. The inventory fell due to growing demand from refineries and a drop in US imports. However, US crude oil inventories are 9.8% higher than in the same period in 2015.
  6. Australian employment data: Thursday, 1:30. Australian unemployment rate fell unexpectedly to 5.8% in February, from 6.0% in the previous month. However, the number of new jobs barely rose, increasing by 300, as 15,900 new full-time jobs were offset by the loss of 15,600 part-time workers. The unemployment rate declined since fewer people sought work and the participation rate fell to 64.9% from 65.1%.  Australian labor market is expected to expand 18,600 jobs hwile the unemployment rate is estimated to rise to 5.9%.
  7. UK rate decision: Thursday, 11:00. Bank of England maintained its monetary policy and benchmark rate, noting the policymakers will refrain from changing its strategy before the referendum on EU membership, expecting growth would keep the same momentum this quarter as it had at the end of last year. The sterling has suffered from the uncertainty surrounding the UK vote and is likely to continue its descent in the near term. However, the Bank said rates will raise within the next three years.
  8. US inflation data: Thursday, 12:30. US Consumer Price Index, excluding food and energy, climbed 0.3% in February after a similar rise in January, raising yearly core CPI by 2.3% in the 12 months through February, the largest increase since May 2012. Economists expected a monthly rise of 0.2% and a yearly gain of 2.2%. Fed Chair Janet Yellen said the increase may be related to temporary factors but a gradual inflation rise is expected in the coming months. Even though consumers paid more for new automobiles, a 13% decline in gasoline prices, offset both the increase in core CPI and a 0.2% gain in food prices, causing CPI to contract 0.2% in February after being unchanged in January. Both CPI and core CPI are forecast to rise 0.2% in March.
  9. US Unemployment Claims: Thursday, 12:30. The number of Americans filing initial claims for unemployment benefits declined more than expected last week, indicating the labor market continues to strengthen despite lukewarm economic growth. The number of new claims fell 9,000 to a seasonally adjusted 267,000. Economists expected a reading of 271,000. This was the 57th week where claims remained below the 300,00 line, the longest stretch since 1973. The four-week moving average of claims rose 3,500 to 266,750. A report showed hiring by U.S. companies surged in February to the highest level since November 2006. The number of new claims is expected to rise by 270,000 this week.
  10. US UoM Consumer Sentiment: Friday, 14:00. The UoM preliminary consumer sentiment index reached 90.0 in March, compared with a final February reading of 91.7.  Economists expected the February index would rise to 92.1. Despite the surge in January, consumers became more concerned about economic growth in the U.S., financial market volatility and turmoil abroad. Consumers no longer believe the economy would grow beyond 2.4% this year. Economists expect consumer sentiment index to rise to 92.3 in April.

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

*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