Forex Weekly Outlook -May 9-13

The past week may have marked a big change in the dollar’s fate. The upcoming week will show us if this was a ont time correction or a big change.  Federal Budget Balance, U.S. and Canadian Trade Balance, Ben Bernanke’s testimony and US Employment figures are the main events this week. Here is an outlook on the possible market-movers.

Commodities were showing overbought signs early in the week, with silver collapsing. After hawk Trichet turned dovish about inflation and asked for a strong dollar, commodities collapsed, the dollar rose, and the Euro continued lower.

While the Non-Farm Payrolls were surprisingly good and triggered strong moves in both directions, the Greek troubles pushed the Euro way down and the dollar up. Greece will continue accompanying us in the new week, but we have quite a few events.

U.S. services sector unexpectedly dropped to 52.8 last week from 57.3 in Marc much lower than 57.4 forecasted. One of the major causes is believed to be the sharp rise of energy and food costs while Manufacturing is still in good condition above 60. This could GDP growth in the second quarter. Let’s start:

1. US Trade Balance: Wednesday, 13:30. The U.S. trade deficit decreased in February to a $45.8 billion from $47 billion in January as Americans imported more goods than they exported. Higher oil prices are expected to widen deficit further. Deficit is expected to widen to $46.6 billion
2. US Federal Budget Balance: Wednesday, 19:00. U.S. federal budget deficit decreased less than expected to a seasonally adjusted -188.20B, from -222.50B in the previous month. Economists predicted deficit to narrow to 157.50B. Expenditure is 11% higher this year due to housing and economic recovery aid programs.
3. Australian Employment Data: Thursday, 2:30 Australian economy added 37,800 new positions in March following a drop of 8,600 jobs in the previous month. Analysts predicted a more modest rise of 23,100 hobs. Meantime Australia’s unemployment rate surprisingly dropped in March to 4.9%, from 5.0% in February after analysts predicted it would remain unchanged. These figures show an overall improvement in the job market. 17,400 new jobs are expected to be added with the same Unemployment rate of 4.9%.
4. US Retail Sales: Thursday, 13:30. Retail Sales increased in March by 0.4% after 1.1% gain in February in light of a rise in fuel and food for a ninth consecutive month, easing concern that the jump in food and fuel costs. However an improvement in the job market increased consumer consumption.0.5% increase is predicted for Retail Sales while 0.7% gain is expected for the Core Retail Sales.
5. US PPI: Thursday, 13:30. Producer price index rose in March by 0.7%, compared with the 1.6% increase in the previous month but below predictions of 1.0% gain. Core PPI, rose 0.3% in March when 0.2% was expected. These figures strengthen the declaration that manufacturers is recovering. A small drop to 0.6% is expected now.
6. US Unemployment Claims: Thursday, 13:30. New U.S. claims for unemployment benefits surged unexpectedly last week to 474,000 the highest level in eight months while 415,000 was expected following 431,000 in the previous week. The causes for this dramatic rise could be spring break layoffs or planning for an emergency settlement program. A small drop is expected now.
7. Ben Bernanke speaks: Thursday, 15:00. Ben Bernanke Chairman of the Federal Reserve is scheduled to testify in Washington DC. His words have high impact on the market. It will be interesting to see if he repeats his dovish attitude as seen in the press conference, where he announced QE2 Lite.
8. US CPI: Friday, 13:30. US consumer prices Index increased further in March by 0.5% following the same climb in February. Commodity and energy prices increase inflation in the US market. However Core CPI gained a mere 0.1% which makes it the preferable indicator of some of the Fed’s committee members claiming there is no need to raise rates in light of the jump in commodity prices. CPI is predicted a small decrease to 0.4% while Core CPI is expected to increase to 0.2%.
9. US UoM Consumer Sentiment: Friday, 14:55. U.S. The Thomson Reuters/University of Michigan’s preliminary Consumer Sentiment report increased more than expected in April reaching 69.6 from 67.5 in March. A similar figure is expected this time.

*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.