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The dollar was on the back foot on more worrying signs from the US economy. Inflation data from the UK, the US and Canada, German Economic Sentiment,   GDP data from Japan, US FOMC Meeting Minutes, employment and manufacturing data as well as speeches from Mario Draghi, Mark Carney and Haruhiko Kuroda. These are the main events on our calendar. Join us as we explore the big market movers for this week.

Last week, further lukewarm data from the US unsettled markets: Retail sales disappointed with a flat reading after gaining 1.1% in March, missing forecast for a 0.3% rise; Core sales rose a mere 0.1% while anticipated to rise 0.4%. Producer prices declined 0.4% in April after a 0.2% gain in the prior month, while expected to increase 0.1%; Consumer sentiment also disappointed with a sharp drop from 95.9 in April to 88.6 this month, lower than the 95.8 forecast by analysts. However, jobless claims continued to decline reaching 264,000 after posting 265,000 in the prior week. Will the US economy shake off losses in the coming weeks?  Let’s start:

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  1. UK inflation data: Tuesday, 8:30. UK Consumer Prices remained at 0% for the second consecutive month in March. A decline in clothing and footwear was offset by a rise in petrol prices. This reading was the lowest since estimates began in the late 1980s. However falling oil prices were the major force behind the low inflation levels. Economists believe inflation will pick-up in the second half of 2015 after oil price pressure subsides.  CPI is expected to remain flat in April.
  2. German ZEW Economic Sentiment: Tuesday, 9:00. German investor sentiment declined unexpectedly in April after six months of gains, caused by rising uncertainty regarding Greece’s debt crisis and its impact on Germany. The ZEW index of investor and analyst expectations declined to 53.3 from 54.8 in March, while economists expected a rise to 55.6. However, despite the fall in sentiment the ECB is convinces that the German economy will continue to strengthen due to the exceptional policy stimulus in Europe. German investor sentiment is expected to fall further to 50.1 this time.
  3. US Building Permits: Tuesday, 12:30. The number of residential building permits issued in March declined 5.7% from February reaching an annual rate of 1,039,000. Analysts expected a higher figure of 1,080,000. Meanwhile, privately-owned housing starts in were 2.5% lower than in March reaching a seasonally adjusted annual rate of 926,000. The lukewarm figures suggest the economy is struggling to rebound from a weak start of 2015. The number of residential building permits is expected to rise to 1,070,000 in April.
  4. Stephen Poloz speaks: Tuesday, 15:45. Bank of Canada Governor Stephen Poloz is scheduled to speak in Charlottetown. Poloz may talk about the negative effects from the oil price shock and the prospects of expansion. The Governor may also talk about the possibility of further rate changes in the coming months.
  5. Japan GDP data: Tuesday, 23:50. Japan rebounded in the fourth quarter of 2014, expanding 0.6%. Although the release was weaker than estimated it showed an annual growth of 2.2%. Exports edged up 0.2% and the weak yen increased foreign demand. Private consumption increased 0.3%, but business spending grew just 0.1%. Economists expected a quarterly growth of 0.9% and an annual growth of 3.7%. Possible downside risk is the expected sales tax due to reach 10% in April 2017. This is why the BOJ is determined to maintain accommodative monetary policy to boost domestic demand and increase growth. Japan’s growth in the first quarter is expected to reach 0.4%.
  6. US FOMC Meeting Minutes: Wednesday, 18:00. In the most recent meeting in April, the Fed removed forward guidance, opening the door to raising the rates. While they did express some worries about the economy, the statement was perceived as somewhat hawkish, especially on the background of the poor GDP released on the same day. The minutes could reveal more worries and good weigh on the dollar. We have already seen in the past how the minutes took a different approach than the statement.
  7. US Unemployment Claims: Thursday, 12:30. The number of jobless claims continued to decline this week dropping additional 1000 from last week, reaching 264,0000. The reading was better than forecasted, pushing the average over the past month to the lowest level in 15 years reaffirming the rebound in the US labor market. Fed Chair Janet Yellen closely monitors employment data to determine whether a rate hike is in order. The number of jobless claims is expected to reach 267,000 this week.
  8. US Philly Fed Manufacturing Index: Thursday, 14:00. The Philadelphia manufacturing index surprised in April by rising to 7.5 points from 5.0 in March. Analysts expected the headline index to reach 6.5 points. New orders fell to 0.7 from the previous reading of 3.9, the lowest reading of new orders since May 2013. Meanwhile, the employment index rose to 11.5 from the March’s reading of 3.9, the highest since November. Inflation declined sharply to -7.5 from March’s reading of -3.0. Other data suggest weakness in the manufacturing sector. The Philadelphia  manufacturing index is forecasted to rise further to 8.3 in May.
  9. Mario Draghi speaks: ECB President Mario Draghi will speak in Sintra-Portugal at the ECB Forum on Central Banking. Policy makers from various countries will attend the ECB Forum and discuss the relationship between inflation and unemployment from a broader perspective as well as its implications for current monetary policy-making globally. He recently dragged the euro lower, but this was only temporary.
  10. Japan rate decision: Friday. The Bank of Japan decided to continue implementing its present monetary policy despite failing to reach its deadline for the 2% inflation target. BOJ Governor Haruhiko Kuroda said that further easing measures are not necessary, blaming the weak inflation on lower oil prices. However many analysts believe the BOJ will decide to ease policy again in October. Kuroda postponed the inflation target to around April to September 2016 saying trend inflation is improving steadily. Analysts do not expect any changes in Japan’s monetary policy.
  11. US inflation data: Friday, 12:30. U.S. Consumer Price Index increased 0.2% in March continuing its rise from February, in line with market forecast. The main increase occurred in energy and shelter costs. However, on an annual basis inflation turned negative, falling 0.1%, compared to February’s unchanged reading. Excluding volatile energy and food prices, core inflation also rose 0.2% following February’s 0.2% gain, according to forecasts. On an annual basis, core inflation edged up 1.8%, up from the previous reading of 1.6%. CPI is expected to rise by 0.1% and Core CPI is expected to gain 0.2% in April.
  12. Mark Carney and Haruhiko Kuroda speak: BOE Governor Mark Carney and BOJ Governor Haruhiko Kuroda will speak in Sintra-Portugal at the ECB Forum on Central Banking. Policy makers from various countries will attend the ECB Forum and discuss the relationship between inflation and unemployment from a broader perspective as well as its implications for current monetary policy-making globally.

*All times are GMT.

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

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