Forex Weekly Outlook April 3-7

Currencies traded in a mixed manner in the last week of Q1. A rate decision in Australia, the FOMC meeting minutes a full build-up to the all-important Non-Farm Payrolls stand out. These are the top events on forex calendar. Join us as we explore the market-movers of this week.

US Gross domestic product for the final quarter of 2016 was revised up to an annualized pace of 2.1% from 1.9% in the previous estimate, as consumer spending edged up to 3.5%. The data demonstrates the important contribution of consumer spending to US growth as the employment market continues to tighten. Economists expect first-quarter growth of 1.9%, while the Trump administration talks about a 3% pace or more. Will we see a further climb in the first quarter?  Let’s start:

1. US ISM Manufacturing PMI: Monday, 14:00. ISM manufacturing PMI exceeded expectations in February hitting 57.7. This was the highest reading since December 2014, indicating solid growth in the manufacturing sector. Analysts expected a climb to 56.2. Despite the fact that the ISM and the manufacturing PMI figures did not coincide, the general trend shows the manufacturing sector is robust. Manufacturing PMI is expected to decline to 57.2 in March.
2. Australian rate decision: Tuesday, 3:30. The Reserve Bank maintained the official cash rate at 1.5% in March, keeping the rate unchanged for the sixth meeting in a row.  Reserve Bank governor Philip Lowe often spoke about keeping rates on hold to balance the need to boost inflation while maintaining financial stability amid record household debt. Policymakers are following international interest rate movements before making a move.
3. US ADP Non-Farm Employment Change: Wednesday, 12:15. According to the ADP report companies added a hefty jobs gain of 298,000 in February, shifting away from the service-sector to goods producers. Economists expected an increase of 184,000. These results preceded the Non-Farm Payrolls report, with the healthy 235,000 gain, paving the way for the Fed’s recent rate hike. ADP report is expected to show a 191,000 jobs gain in March.
4. US ISM Non-Manufacturing PMI: Wednesday, 14:00. US service sector expanded in February, climbing to 57.6 from 56.5 in January. Economists expected the index to remain unchanged. The majority of responders were positive about business conditions and the overall economy. The business activity index increased to 63.6 in February from 60.3 in January, reaching its highest reaching since February of 2011.  The new orders index edged up 61.2 in February from 58.6 in January and the employment index climbed up to 55.2 in February from 54.7 in January. Non-Manufacturing PMI is expected to reach 57.1 this time.
5. US Crude Oil Inventories: Wednesday, 14:30. U.S. crude stocks increased by 867,000 barrels in the week ending March 24, however refineries increased output, causing gasoline stocks and distillate inventories to decline. Analysts expected a higher reading of 1.4 million barrels. Gasoline stocks declined by 3.7 million barrels,  U.S. crude imports fell 543,000 barrels per day.
6. US FOMC Meeting Minutes: Wednesday, 18:00. Minutes from the Fed’s rate hike meeting in March will be released in April, providing an in-depth account on the reasons behind the 0.25 percentage point rate rise. Yellen said, in the press conference following the meeting that the economy is doing well and that policymakers are confident in the robustness of the economy. The minutes will also include the Fed’s outlook regarding further rate hikes this year.
7. US Unemployment Claims: Thursday, 12:30.  The number of Americans filing new claims for unemployment benefits declined by 3,000 for the week ended March 25, suggesting some loss of momentum in the robust labor market. The 258,000 new claims registered were higher than the expected 240,000 increase but the number of claims remained below the 300,000 level associated with a healthy labor market. The labor market is currently near full employment. The four-week moving average of claims increased 7,750 to 254,250. Jobless claims is expected to reach 251,000 this week.
8. Canadian employment data: Friday, 12:30. Canada’s economy created 15,000 jobs in February, pushing the unemployment rate to a near ten-year low of 6.6%. A healthy gain of 105,000 full time positions offset a 90,000 decline of part-time jobs. The reading was far better than the 600 jobs gain forecasted by analysts. This positive data joins an upbeat trend in the Canadian economy suggesting the Canadian economy has turned the corner. Economists expect Canadian job creation of 5,700 and a rise to 6.7% in the unemployment rate.
9. US Non-Farm Employment Payrolls: Friday, 12:30. U.S. Nonfarm payrolls release showed a job creation of 235,000 positions in February, beating expectations. Wages also increased providing assurance that the US economy is ready for another rate increase. The construction sector recorded its largest gain in nearly 10 years. Analysts expected a job creation of 196,000 in February. Wages continued to increase rising 0.2% as in January. The unemployment rate fell one-tenth of a percentage point to 4.7% despite higher participation rate in the employment market. US jobs report for March is expected to show a job gain of 176,000 while the unemployment rate is expected to remain unchanged at 4.7%.

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

*All times are GMT.

Our latest podcast is titled  Brexit Bad and “Clean Coal”

Follow us on Sticher or iTunes

Safe trading!