Forex Weekly Outlook – March 22-26

Apparently the dollar only took a break just to show fresh strength. The upcoming week. The upcoming week starts with an easy Monday and then becomes busy with many American events. Note a special British event – the annual release of the budget. Let’s review the major market-movers for the upcoming week.

Also in the upcoming week, there’s a smaller-than-usual time difference between North America and Europe. This gives one extra overlapping hour, making day traders more busy and getting European and American events closer to each other – meaning more volatility. OK, let’s start:

1. British CPI: Published on Tuesday at 9:30 GMT. British inflation is above the governments’ target of 1-3%. This was already seen last month with a rise to 3.5% (annualized). Mervyn King was then forced to write a letter explaining the reasons for the result and the measures that will be taken. He wasn’t too excited, and wants to see a weaker Pound. This time, CPI is expected to rise by 3.1%, getting back in line. Was King right? If so, the Pound will drop.
2. American Existing Home Sales: Published on Tuesday  at 14:00 GMT. The vast portion of home sales is of existing homes. This sector has seen a strong rise due to government programs, but then returned to normal. Sales are expected to stay almost unchanged at 5 million. A surprise will move the markets.
3. German Ifo Business Climate: Published on Wednesday at 9:00 GMT. This German survey continued to improve, while other German indicators fell. This is a wide survey of 7000 businesses, making it a closely watched indicator for EUR/USD. A small rise from 95.2 to 95.8 is predicted. This might hurt the Euro, that already began the awaited plunge.
4. British Annual Budget Release: Published on Wednesday at 12:30 GMT. Alistair Darling, the Chancellor of the Exchequer, knows how to pound the pound again and again. Less than two months before the general elections, the deficit isn’t expected to be reduced. Whatever the outcome, the Pound will rock.
5. American Durable Goods Orders: Published on Wednesday at 12:30 GMT. Last month, this indicator was quite confusing – durable goods orders rose by 2.6% while the core figure fell by 1%. These figures were revised to the downside. This time, both numbers are expected to rise by less than 1%.
6. American New Home Sales: Published on Wednesday at 14:00 GMT. Although new home sales are only a small part of home sales, this figure also tends to move currencies. Also here, when the government retreated, home sales plunged. A small rise from 309K to 316K is predicted.
7. New Zealand GDP: Published on Wednesday at 21:45 GMT. New Zealand takes its time with publishing the Gross Domestic Product. A growth rate of 0.8% is expected in Q4 of 2009. This is higher than Q3’s 0.2%. Also Australia saw similar growth rates in Q3 and Q4 – this figure will also move the Aussie.
8. American Unemployment Claims: Published on Thursday at 12:30 GMT. A steady drop in jobless has been seen since they touched 496K about a month ago. Another small drop is predicted this time, from 457K to 453K. After the last negative NFP figure, will we see a gain in jobs next time?
9. Ben Bernanke talks: Begins testifying on Thursday at 14:00 GMT. The head of the Federal Reserve comes to House Financial Services Committee for the second part of his testimony, that will focus on the exit strategy. This time it’s a questions and answers session. The questions and the reactions are unknown, so this may easily lead to remarks that can move the markets, even if Bernanke doesn’t bring any real news.
10. Japanese Tokyo Core CPI: Published on Thursday at 23:30 GMT. Japan’s deflation is a big burden on the economy, for many years. Tokyo’s figure is released before the national number and has a strong impact on the Yen. An annual drop of 1.7% is expected to follow last month’s 1.8%.
11. American Final GDP: Published on Friday at 12:30 GMT. The second release of American GDP for Q4 of 2009 was better than the first release – 5.9% (annualized). This erased the doubts that were about growth, that isn’t accompanied with a growth in jobs. The final release is expected to confirm this strong growth rate.

Further reading:

• For the Euro, read the  EUR USD Forecast.
• For the British Pound, look into the  GBP/USD forecast.
• For the Australian dollar, read the  AUD/USD forecast.
• For USD/CAD, check out the  Canadian dollar forecast.

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