Forex Weekly Outlook – Feb 28-Mar 4

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US Housing Data, Canadian Rate Decision and US Employment data are just a few of the numerous market movers scheduled this week. Here is an outlook on the events ahead.

American consumers confidence surged to 70.4 in February, the highest level in three years, thanks to better prospects for the economy and jobs. Although Consumer confidence remains low in historical terms the figures are encouraging. Is the American economy finally on the right track to recovery?

  1. Canadian GDP: Monday, 13:30. Canadian gross domestic product rose 0.4% in November for the second consecutive month following 0.2 % in October. The increase was due mainly to higher petroleum production. A gain of 0.3% is expected now.
  2. US Pending Home Sales: Monday, 15:00. Pending home sales in the United States climbed 2.0% in December from the previous month indicating a recovery in the housing market. This was the fifth straight monthly rise in the pending home sales index stimulated by the slight recovery in the economy and still-low mortgage rates. A drop of 2.2% is predicted this time.
  3. Australian Rate Decision: Tuesday, 3:30. Australia’s central bank kept its key cash rate unchanged at 4.75% in line with expectations. The last rate hike was in November however no more climbs are expected in the near future. The same rate of 4.75% is expected now.
  4. Canadian Rate Decision: Tuesday, 14:00. The Bank of Canada held its overnight lending target at 1% for the third straight time. Canada’s economy slowed last year to forcing policymakers to withdraw stimulus measures to help recovery. The strong Canadian dollar also slowed recovery in the export sector, the backbone of the Canadian economy, and that Europe’s debt woes remain a black cloud over the global economy. Analysts think the bank is unlikely to push Canadian rates above their U.S. equivalents because this could strengthen Canadian dollar new highs. BOC is likely to maintain its overnight rate at 1.0%.
  5. US ISM Manufacturing PMI: Tuesday, 15:00. Manufacturing activity in the U.S. rose unexpectedly in January to 60.8 after rising to 58.5 in December the highest level since May 2004. Analysts had expected the ISM index of purchasing managers to decline to 58.2. New orders and production continue to be strong, and employment rose above 60 percent for the first time since May 2004 indicating real recovery in the market. A slight drop to 60.7 is forecasted.
  6. US ADP Non-Farm Employment Change: Wednesday, 13:15. U.S. ADP Non-Farm Employment rose above expectations by a seasonally adjusted 187K in January, after rising by 247K in December. Analysts had expected non-farm private sector employment to increase by 150K. This rise indicates an upward trend in employment gains starting in the middle of 2010. Another encouraging rise of 184K is expected now.
  7. Euro-Zone Rate Decision: Thursday, 12:45. The European Central Bank decided to leave its key interest rate unchanged at 1.0%. The last change was a 25 point cut at the Council’s May 7, 2009 meeting. However, since Trichet’s change in tone on inflation last month, markets have significantly brought forward rate hike expectations. They are now fully pricing in a 25-basis-point rate hike in July and see a 99% chance of another hike of the same magnitude in December. Just a month ago, before the last press conference, the first ECB rate hike wasn’t expected until 2012. ECB will probably leave rate at 1.0%.
  8. US Unemployment Claims: Thursday, 13:30. Last week US Unemployment Claims plunged to 391,000 initial jobless claims better than the 403,000 claims expected and last week’s 413,000 new claims. This is a real signal that the job market is recovering although there’s been little evidence of hiring. The 4-week moving average fell to 402,000 from the previous week’s revised average of 418,500. Further drop to 386,000 in the number of new unemployed is expected now.
  9. Ben Bernanke speaks: Thursday, 15:00. Federal Reserve Chairman Ben Bernanke is tentatively scheduled to deliver his semi-annual report on monetary policy to the U.S. House of Representatives’ financial services committee in Washington DC. The testimony will likely explore a wide array of topics ranging from financial reform to the state of the economic recovery, the Fed’s unorthodox monetary policy and the job market.
  10. US ISM Non-Manufacturing PMI: Thursday, 15:00. The service sector in the U.S. grew unexpectedly to 59.4 in January after rising to 57.1 in December while analysts expected the index to decline to 57.0. This rise indicated expansion in the non-manufacturing sector. Non-Manufacturing PMI  is expected to rise further to 59.9.
  11. American Non-Farm Employment Change: Friday, 13:30. Nonfarm payrolls rose by a mere 36,000 last month much below expectations of 136,000 rise. The low figure is explained by the snowstorms that prevented people from working. Nevertheless the labor market situation is brightening up. A gain of 175,000 is predicted now.
  12. US Unemployment Rate: Friday, 13:30. The U.S. jobless rate unexpectedly fell to 9% in January the lowest level in 21 months following 9.4% in December. However the Fed strives to lower unemployment further to less than 8%. A small rise to 9.1% in the number of Unemployed is forecasted.

*All times are GMT.

Further reading:

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About Author

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

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