Global Economic Releases To Drive The Forex Market

Even if the US Dollar recovered during late Friday, mainly driven by the above 200K NFP and near seven year low of Unemployment Rate, the greenback remained subdued on a weekly basis as downward revision to March month NFP, coupled with softer than expected wage growth and larger Trade Deficit, seem raising bars for the Fed to hike interest rate sooner. The US Dollar Index registered consecutive fourth weekly decline while the greenback’s losses against Euro remained restricted as optimistic EU growth forecasts and better than consensus economics failed to counter pessimism surrounded by expectations of another stalled talks between Greece and its international creditors during Monday’s Eurogroup meeting. GBP was a clear winner after the ruling conservative party, lead by David Cameron, won 2015 general election by surpassing the pre-election polls with 330 seats while nine month high UK Services PMI provided additional fuel to the UK currency. Moreover, the Australian Dollar, even after witnessing the rate cut by the RBA, recovered a bit as possibilities of further interest rate got mitigated and the fresh stimulus from China kept supporting the Aussie against majority of its counterparts.

Having witnessed third attempt in a year by the Chinese central bank to further ease their monetary policy, on Sunday, current week offers many important events for the forex market players to observe. Though, the current week’s economic calendar is lighter that the previous week, the BoE Inflation Report and UK labor market details, Euro-zone GDP, RBNZ Financial Stability report and US Retail Sales, Empire State Manufacturing and Preliminary reading of UoM Consumer Sentiment, are key events to determine near-term forex moves.

To know the details of these economic announcements, stay tuned to Forex Calendar

Lighter But Important US Economic Calendar

With the decent rise in NFP, surpassing 200K again, and the near seven year lows of Unemployment Rate at 5.4%, market players are likely to closely examine US economic details to foresee chances of interest rate alternation by the Federal Reserve. Moreover, weakness into the growth numbers also pushes investors toward this week’s important details to predict US growth and inflation scenario, another important component that could force the Fed to fuel interest rates for the first time since 2006 sooner than later.

Monthly reading of Retail Sales and preliminary UoM Consumer Sentiment, scheduled for Wednesday and Friday respectively, are key details to examine US economic progress at a micro level. Although, the Retail Sales are likely revealing slower than previous growth in sales, to 0.3% against 0.9%, the consumer sentiment index could print a four month high of 96.5 against 95.9 registered earlier. Further, PPI and the Empire State Manufacturing Index, scheduled to release on Thursday and Friday respectively, are also showing mixed expectations as the PPI could print 0.1% after reversing four month declines in its previous announcement to 0.2%, while the gauge of manufacturing is expected to reverse its -1.2 print by revealing 5.9 number.

After recent labor market details clouded its March pessimism, expectations concerning earlier interest rate hike could strengthen; however, rise in Retail Sales and manufacturing gauge, coupled with improvement in consumer sentiment, may provide additional strength to the greenback traders who foresee such move sooner and supports considerable US Dollar rally.

UK Details To Take The Center Stage of Forex Market

Last week’s electoral victory by the ruling UK party fueled the GBP towards testing four month high against its US counterparts as speculations concerning extended pro-GBP policies spread optimism amongst UK currency traders. Moreover, nine month high Services PMI is likely to become a reason for the BoE Governor to become hawkish in his speech during Quarterly Inflation Report (QIR) announcement, on Wednesday.

GDP and Inflation Projection Based On Market Interest Rate Expectations And £375 Billion Purchased Assets

Source: www.bankofengland.co.uk

The Bank of England, that maintained its status-quo monetary policy during Monday’s MPC meeting, avoided supporting the interest rate hike during its February meeting, signaling that the recent decline in inflation reading could hinder the path of future interest rate hike should it stretch a bit longer; however, it remained a bit firm for its growth expectations. The UK central bank is expected to update its forward guidance on interest rates during the same announcement on Wednesday and a downward revision to growth/ inflation numbers or interest rate forecast and/or hawkish comments by the BoE Governor, in his speech following the announcement, could pullback recent gains by the GBP. Considering the recent victory of ruling party, that supports extended beneficial policies for the GBP, chances are higher that the BoE Governor spread hawkish words and fuels the near-term GBP rally; however, decline in GDP reading coupled with weaker inflation reading, could restrict the BoE to upgrade its inflation forecasts in QIR and can drag the GBP rally. Hence, it would be better to closely examine the details of announcement to determine the chances of BoE’s interest rate hike and the future course of GBP.

Other than the QIR, monthly details of UK Manufacturing Production and the latest batch of employment figures, mainly the Unemployment Rate and Average Earnings, scheduled for Tuesday and Wednesday respectively, will also provide key details to determine near-term GBP moves. The Manufacturing Production is expected to slow a bit to 0.3% from 0.4% while Unemployment Rate is likely to continue drifting lower towards testing lowest level since September 2008 by printing 5.5% number against previous release of 5.6%. The Average Earnings are likely to remain intact with 1.7% growth and the Claimant Count Change could register a bit of improvement by showing -20.1K against previous release of -20.7K. With the labor market details continue showing considerable improvements, chances are higher that the GBP could extend its recent gains should the actual results meets consensus; moreover, the industrial production could limit the GBP advance given the number plunges below expectations.

Flash estimations of Q1 2015 Euro-Zone GDP, scheduled for Wednesday release, is the only release from Euro-zone to help determine near-term Euro moves. The growth number is expected to rally towards highest level since May 2011 by printing 0.5% reading against its previous reading of 0.3%. Recent flow of better-than-expected economics from the Euro-zone could become a reason for the GDP to follow estimates and fuel near-term Euro rally; however, progress on talks between the Greece and its international creditors during the Eurogroup meeting, starting from Monday, could become important to better foresee Euro moves.

RBNZ Financial Stability Report, the bi-annual publication by the New-Zealand central bank, scheduled for Tuesday, is an important release to forecast immediate NZD moves. The RBNZ Governor, in latest monetary policy meeting, talked down the need of interest rate hike and rather spread dovish words to pullback the NZD. Should the Governor continue observing his dovish tone, in his speech following the report announcement, the NZD could head for additional southward trading; however, a neutral or positive remarks are likely to again fuel the NZD.

Last but not the least, Chinese Industrial Production, scheduled for release on Wednesday, becomes an important detail to forecast chances of further easing by the Chinese central bank that said during its Sunday announcement that further easing can’t be denied. The forecasts are optimistic that signals the Chinese Industrial production to rally by 6.1% against previous reading of 5.6%, that was lowest since March 2009. Should the actual reading plunges below the previous reading, chances are higher that the Chinese Central bank again practices any of the monetary policy easing methods to pump their economy. Even if the immediate impact of the weaker release could pullback commodity currencies, NZD, CAD and AUD, expectations concerning additional stimulus and higher demand by the world’s industrial power house could provide a bit of strength to these currencies.

Follow me on twitter to discuss latest markets events @Fx_Anil

 

Anil Panchal
Market Analyst
Admiral Markets

At any use of the analytical material taken from the site of company Admiral Markets, and the secondary publication on any other resources, the rights to intellectual property for a dealing center «Admiral Markets», the reference to the company site is obligatory.

 

 
Intro to Forex

Get this eBook if you would like to learn more about Foreign Exchange basics and find out how Forex markets work.

 
 

Learn more about Forex Trade and Trading in Australia with us!

X
Loading