Forex Weekly Outlook March 2-6 – Busy Week With Rate Decisions, OPEC and Nonfarm Payrolls

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The calendar features interest rate announcements in Canada and Australia as well as UK and eurozone PMIs. The week wraps up with U.S. nonfarm payrolls report. Here the highlights for the upcoming week.

The U.S. economy continues to perform well, as GDP for Q4 was unrevised at 2.1%. German business confidence was stronger than expected, as the reading of 96.1 topped the forecast of 95.0 points. The coronavirus has taken a steep toll on the Chinese economy, as China’s manufacturing and services PMIs fell sharply in February, with readings of 35.7 and 29.6 points, respectively. Canada’ economy climbed 0.3% in December, up from 0.1% a month earlier.

  1. Eurozone Manufacturing PMIs: Monday: 8:15 for Spain, 8:45 for Italy, final French figure at 8:50, final German one at 8:55, and final euro-zone number at 9:00. These final PMI readings are expected to confirm the initial releases from late February, and all the estimates are below 50, which points to contraction. Spain’s manufacturing sector has been in contraction mode since May and the trend is expected to continue in February, with an estimate of 48.9 pts. In Italy, the manufacturing sector has been in decline for over a year and the forecast for the upcoming release is 48.0 pts. The German indicator is expected at 47.8 and the eurozone PMI is projected to improve to 49.1 pts. The French PMI is expected to slow to 49.7, down from 51.1 a month earlier.
  2. British Final Manufacturing PMI: Monday, 9:30. The initial estimate for this index came in at 51.9, beating the estimate of 49.7 points. The second estimate is expected to confirm this figure.
  3. US ISM Manufacturing PMI: Monday, 15:00. The PMI managed to climb above the 50-level in January, after recording five straight readings which pointed to contraction. The estimate for February stands at 50.5 points.
  4. RBA Rate Decision: Tuesday, 0:30. With the China coronavirus taking its toll on the Australian economy, there is some pressure on the RBA to lower rates. The bank has held rates at 0.75% since October and analysts do not expect a cut at the upcoming meeting. A dovish rate statement could send AUD/USD to lower ground.
  5. British Construction PMI: Tuesday, 9:30. The PMI remains mired in contraction territory and came in at 44.4 in December. The index is expected to improve to 48.4 in January.
  6. Eurozone inflation: Tuesday, 10:00. The initial estimate for Eurozone CPI edged up to 1.4% in February, matching the estimate. No change is expected in the final estimate.
  7. Australian GDP: Wednesday, 0:30. The economy gained 0.4% in Q3, little changed from the 0.5% gain in Q2. Another gain of 0.4% is expected in the fourth quarter.
  8. Eurozone Services PMI’s: Wednesday, 8:15 for Spain, 8:45 for Italy, final French figure at 8:50, final German one at 8:55, and final euro-zone number at 9:00. Services sector numbers have generally been better than those in the manufacturing one. Spain had a score of 52.5 in January. Italy had 51.4. The initial read for France stood at 52.6, for Germany it was 53.3 and for the euro-zone 52.8. No changes are expected in the final versions.
  9. British Final Services PMI: Wednesday, 9:30. The initial estimate for services PMI came in at 53.3, with the second estimate slightly revised lower to 53.2 points.
  10. US ISM Non-Manufacturing PMI: Wednesday, 15:00. The services sector continues to outperform manufacturing, and services PMI climbed to 55.0 in January, its highest level in five months. The estimate for February stands at 55.1 points.
  11. BoC Rate Decision: Wednesday, 15:00. The BoC has kept the benchmark rate pegged at 1.75% since October 2018 and no change is expected at the upcoming meeting. The tone of the rate statement could affect the movement of USD/CAD.
  12. OPEC+ Meetings: Thursday, All Day. Oil ministers from OPEC and non-OPEC nations will meet for a crucial meeting in Vienna. OPEC has proposed cutting production in order to stabilize sagging oil prices, but it needs Russia on board if the cuts are to have any effect.
  13. US Employment Reports: Friday, 13:30. Nonfarm payrolls and wage growth are both market-movers which can have a significant impact on currency movement. NFP is expected to drop from 225 thousand to 185 thousand, while wage growth is projected to edge up from 0.2% to 0.3%.
  14. Canadian Employment Reports: Friday, 13:30. The labor market has looked strong, with the economy creating more than 34 thousand jobs in each of the past two readings. The unemployment rate dropped to 5.5% in January, down from 5.7%. The upcoming employment data could have a significant impact on the movement of USD/CAD.

*All times are GMT

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Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.

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