Forex Weekly Outlook -May 2-6

US employment data and Australian, British and European rate decisions are the main events this week. Here is an outlook for this week’s market-movers. Will the blow that the dollar got from Ben Bernanke continue to push the dollar lower? Or will it consolidate as the market is calmer after the news?

Economists believe that Federal Reserve officials will get ready to end QE2 in September’s statement by selling the securities it purchased to decrease borrowing costs. However, the current, small continuation of QE2 in the form of QE2 Lite announced just now, is a factor weighing heavily on the greenback.

1. US ISM Manufacturing PMI: Monday, 15:00. The manufacturing sector continued expanding in March reaching 61.2 a bit lower than 61.4 reading in February thanks to growth in new orders and production. However there is a growing fear from inflation in commodity prices. A small drop to 59.9 is expected.
2. Australian Rate Decision: Tuesday, 5:30. The RBA maintained its key rate at 4.75% in April in line with expectations. There is a growing fear of inflation since oil prices continue to climb and consumer demand is still low However economist do not estimate a rate hike.
3. US ADP Non-Farm Employment Change: Wednesday, 13:15. ADP Nonfarm Payrolls were not favorable with 201,000 new jobs last time following: 217,.000 in the previous month. A small rise to 202,000 is expected now.
4. US ISM Non-Manufacturing PMI: Wednesday, 15:00. A sudden drop occurred in the service sector decreasing in March to 57.3 in March from 59.7 in February and below 59.8 expected. Nevertheless the service sector is still above the 50 point line indicating expansion. A rise to 58.4 is forecasted.
5. British rate Decision: Thursday, 12:00. The Bank of England maintained its benchmark rate at 0.5% in April for 25 consecutive months. The decision was made due to the positive and steady state of the economy in recent months.No change is expected this time.
6. Euro-Zone rate Decision: Thursday, 12:45. European European Central Bank increased interest rates by 25 basis points for first time since July 2008 to lower inflation pressures deriving from increasing oil prices and commodities in the eurozone. Jean-Claude Trichet president of the  European Central Bank stated that the peril of inflation still exists and that monetary policy is still “accommodative” insinuating that the ECB could increase rates further. The same rate is predicted now.
7. US Unemployment Claims: Thursday, 13:30. The number of new applications for  unemployment benefits  rose to 429,000 the highest level since January contrary to the 392,000 predicted signaling a set back in the job market. A slight drop to 419,000 is forecasted.
8. Ben Bernanke speaks: Thursday, 14:00. Chairman of the Federal Reserve Bank Ben Bernanke is scheduled to speak at the 47th Annual conference on Bank Structure and Competition, in Chicago. His words have major short time effect on the market.
9. Canadian Employment Data: Friday, 12:00. Following the climb of new positions in recent month a decrease of 1500 jobs occurred in March however 90,600 full-time jobs were added. Meantime unemployment rate dropped to 7.7 % from 7.8% in February. The overall picture is optimistic indicating growth in the Canadian job market. 15,200 new jobs are forecasted with the same Unemployment rate of 7.7%.
10. US Non-Farm Employment Change: Friday, 13:30. Non-farm payrolls gained 216,000 jobs in March following 194,000 new jobs in February signaling real growth in the US economy. 185,000 new positions are expected this time.
11. US Unemployment Rate: Friday, 13:30. The unemployment rate dropped to the lowest rate is two years reaching 8.8% in March. The rate has fallen 1.0% in the last four months which is good news for the job market and the US economy. No change is forecasted.

*All times are GMT.

Further reading:

• For EUR/USD, check out  the  Euro/Dollar forecast.
• For the Japanese yen, read the  USD/JPY forecast.
• For GBP/USD  (cable), look into the  British Pound forecast.
• For the Australian dollar (Aussie), check out the  AUD forecast.
• For the New Zealand dollar (kiwi), read the  NZD forecast.
• For USD/CAD (loonie), check out the  Canadian dollar forecast.