Forex Weekly Outlook April 16-20

The US dollar managed to erase most of its losses at the end of a busy week, that saw rising worries from all the world. US retail sales, German ZEW Economic Sentiment and US Unemployment Claims are the highlight of this week. Here is an outlook on the main events ahead.

China’s growth in Q1 was disappointing: the world’s No. 2 economy saw a rate of only 8.1%, worse than official and unofficial expectations. Lower Chinese demand weighs on Europe.  In Europe, Spain sees yields moving to dangerous levels as budget challenges with the regions and EU inspectors arrive. A  worrying rise in US jobless claims  caused concern over the labor market stability with a climb to 380,000, higher than levels seen recently. QE3 is not totally off the table.

1. US Retail Sales: Monday, 12:30. U.S. retail sales edged up to a five month high in February rising 1.1% despite the rising prices of gasoline, Core sales excluding automobiles surged 0.9% indicating the American consumers are more confident due to improvement in economic conditions. Retail sales is expected to rise  0.4% this time while Core CPI is predicted to climb 0.6%.
2. US TIC Long-Term Purchases: Monday, 13:00. U.S. Treasury International Capital surged beating expectations in January reaching USD101.0 billion form USD19.1 billion in December amid a massive purchases of long-term U.S. securities by foreign residents. Economists expected a small rose to USD29.3 billion, another good sign for the US economy. A drop to 41.3 billion is expected now.
3. UK inflation data: Tuesday, 8:30. Inflation dropped to its lowest level since 2010 reaching 3.45 from 3.6% in January amid lowering of VAT and cuts in electricity and gas bills giving boost to British consumers. The reading was in line with predictions. A small rise to 3.5% is predicted.
4. German ZEW Economic Sentiment: Tuesday, 9:00.Germany’s economic sentiment continued improving for the fourth straight month in March, climbing 16.9 points to 22.3 while economists expected the index to rise to10. In light of the good job market conditions demand is continuing to grow giving further boost to the German economy. A decline to 20.2 is anticipated.
5. US Building Permits: Tuesday, 12:30. The housing industry continues to improve with a 3.5 year high of 717,000 new building Permits following680,000 in the previous month. Economists expected a smaller rise to 690,000 indicating that housing activity has rebounded from its recession. A small decline to 710,000 is forecasted.
6. Canadian rate decision: Tuesday, 13:00. The Bank of Canada maintained its target for the overnight rate at 1% in March.  However in light of the fading of global uncertainty rates are bound to go up in the near future. No change is expected.
7. UK employment data, Wednesday, 8:30. The number of people claiming unemployment benefits in theU.K. increased more than expected in February rising 7,200 above the 6,000 predicted by analysts and higher than the 7,000 increase in the previous month. Meanwhile unemployment rate remained elevated at the highest level since 1995 reaching 8.4%. A drop to 6,600 is anticipated this time.
8. US Unemployment Claims: Thursday, 12:30. The number of Americans filing applications for jobless benefits increased more than predicted last week reaching 380,000 from 367,000 in the prior week, raising concerns among policy makers that the labor-market recovery is not stable. Analysts expected 355,000 claims. In light of this reading both Fed Vice Chairman Janet Yellen and Fed Bank of New York President William C. Dudley said they support maintaining low interest rate until 2014 to boost employment market.  Is this a trend or a one time event?  A drop to 370,000 is predicted.
9. US Existing Home Sales: Thursday, 14:00. Sales of second hand homes in theU.S. unexpectedly dropped in February to a seasonally adjusted annual rate of 4.59 million from an upwardly revised 4.63 million in January. Economists expected a higher figure of 4.61 million units. Nevertheless there is a pickup in the housing market amid the considerable improvement in the labor, salary conditions and cheaper housing prices. An increase to 4.62 million is expected now.
10. US Philly Fed Manufacturing Index: Thursday, 14:00. The Philadelphia manufacturers increased their activity in March rising to 12.5 from10.2 in February beating expectations for an estimated 12.0 reading. This considerable growth is another indicator of the general recovery in the US economy. This is the highest reading since April of last year. A small decline to 12.1 is anticipated.
11. Euro-Zone German Ifo Business Climate: Friday, 8:00. German business sentiment climbed unexpectedly for the fifth straight month reaching 109.8 in March, from a revised109.7 in February indicating the German economy seems unaffected by the debt crisis in other EU countries. The strong manufacturing sector working in full steam to comply with growing demand and the strong labor market are good indicators for future growth. A small drop to 109.6 is forecasted.
12. Canadian inflation data: Friday, 12:30. Consumer Price Index increased 0.4% in February, the same rise as in January, amid prices climbing in all major sectors except shelter. Meanwhile core prices excluding volatile items of goods and services, increased by 0.4% in January following a 0.2% rise in January. A decline to 0.3% is expected.

*All times are GMT.

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

Further reading:

• For EUR/USD, check out the  Euro to 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 to USD forecast.
• For the New Zealand Dollar (kiwi), read the  NZD forecast.
• For USD/CAD (loonie), check out the  Canadian dollar
• For the Swiss Franc, see the  USD/CHF forecast.