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Majors, US Dollar Forecast

Forex Weekly Outlook April 10-14

The US dollar eventually emerged as a winner from a tense week. Is this the beginning of a trend? A speech by Janet Yellen, a rate decision in Canada, Australian employment data, US inflation data, and US consumer figures stand out. These are the main events on forex calendar. Join us as we explore the market movers for this week.

 Last week was a huge disappointment for the US employment market, with the NFP showing a meager job creation of 98,000 in March, while economists expected a job gain of 174,000. Weather issues could have played a part in this month’s puzzling data as a big snowstorm in mid-month may have hindered activity. Therefore, it is possible that the weak performance in job creation may be a temporary incident. Meanwhile, wage growth continued to rise with average hourly earnings up by 2.7% on an annualized basis. Another bright spot was a 0.2% decline in the unemployment rate, signaling this mixed data is not all bad.  Let’s start:

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  1. Janet Yellen speaks: Monday, 20:00. Fed Chair Janet Yellen will speak at the University of Michigan, taking questions from the audience. Analysts expect that one of the key issues will be the Fed Minutes warning that stock prices are too high relative to standard valuation measures. Another issue is the call to trim US $4.5 trillion balance sheet as long as the economic data is upbeat. Market volatility is expected.
  2. UK Inflation data: Tuesday, 8:30. UK consumer prices edged up 2.3% in February compared to 1.8% in January, exceeding market forecast. The rise was attributed to rising fuel and food prices.   This was the highest reading since September 2013. Economists had expected a reading of 2.1%. The increase has pushed the rate above the Bank of England’s 2% target. The BoE expects inflation will soar to 2.8% in 2018, as the Brexit vote caused the fall in the pound against the dollar.  UK inflation is expected to reach2.2% this time.
  3. Canadian rate decision: Wednesday, 14:00. The Bank of Canada kept its benchmark interest rate unchanged in March while monitoring “significant uncertainties” weighing on the outlook for the economy. Policymakers are worried that Donald Trump’s new economic policies, such as border tax and protectionist policies, will have a negative effect on Canadian investment and exports. The central bank expected stronger growth in the fourth quarter of 2016 according to positive GDP data. However, exports continue to face difficulties while wage growth has weakened.
  4. Australian employment data: Thursday, 1:30. The Australian employment market contracted by 6400 jobs in February, pushing the unemployment rate to a 13-month high of 5.9%. The reading was contrary to the estimated 16,300 jobs gain. Fulltime positions increased 27,100, while part-time jobs lost 33,500 posts. This breakdown of the numbers does not necessarily signify a trend, since most job gains over the part year are attributed to part-time positions. The participation rate remained unchanged at 64%. A job gain of 20,300 is predicted in March with the unemployment rate unchanged at 5.9%.
  5. US PPI: Thursday, 12:30. U.S. producer prices gained more than expected in February, rising 0.3% compared to 0.6% increase in the previous month. Economists expected a 0.1% rise. In the 12 months through February, the PPI soared 2.2% which is the biggest advance since March 2012, exceeding forecast of a 2.0% gain. The current inflation rate stands at 1.7% nearing the Federal Reserve 2% inflation target. Economists expect producer prices to be flat this time.
  6. US Unemployment Claims: Thursday, 12:30. The number of Americans filing new claims for unemployment benefits declined 25,000 to a seasonally adjusted 234,000 for the week ended April 1. This was the largest decline since April 2015 while the previous week’s reading was upwardly revised to 261,000.   Economists had expected jobless benefits falling to 251,000. The four-week moving average of claims, a more stable measure of labor market, fell 4,500 to 250,000 last week. Jobless claims are expected to reach 242,000 this week.
  7. US Prelim UoM Consumer Sentiment: Thursday, 14:00. Consumer confidence increased to a 16 year high in March as Americans were more optimistic with the current state of their finances and the economy, but remaining divided along party lines about the outlook. The preliminary index of sentiment increased to 97.6 from 96.3 in February. Economists expected sentiment would reach 97.1. Responders reported strong net gains in incomes and wealth while Republicans were “much more optimistic” than Democrats. Furthermore, people were more upbeat about the labor market but at the same time were uncertain about future growth under the new administration. Consumer moral is expected to remain elevated at 97.1 in April.
  8. US inflation data: Friday, 12:30 U.S. consumer prices rose in February by 0.1% after a 0.6% January. On a yearly base, CPI was up 2.7%, the most since March 2012. The figures were consistent with the Fed’s inflation projections, leading to the Fed’s rate hike in March. Meanwhile, core CPI, excluding volatile food and fuel costs, rose 0.2% after a 0.3% increase in the previous month. It gained 2.2% from a year ago. Economists expected CPI to remain unchanged while core CPI to rise 0.2%. The rise in the cost of living over the past year had little effect since wage growth has also increased. CPI is expected to remain unchanged, while core inflation is anticipated to rise by 0.2% in Mach.
  9. US Retail sales: Friday, 12:30. U.S. retail sales inched up 0.1% in February after a 0.6% gain in the previous month, posting the smallest rise in six months. A more lukewarm activity was registered at electronics and appliances stores, apparel outlets and car dealers. However, purchases may have been temporarily restrained by a slowdown in individual tax refunds. The robust confidence, healthy job growth and steady incomes may re boost spending in the coming months. Core retail sales excluding automobiles and service stations increased 0.2% from 1.2% in the prior month. US retail sales are expected to increase by 0.1% with a 0.2% gain in core sales.

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