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Forex Major Currencies Outlook (Mar 25 – Mar 29)

USD

FED has left the interest rate unchanged as expected.

Labour market has remained strong and on average job gains have been solid. They will begin to slow balance sheet runoff in May and will end it in September if the economy evolves as expected. Economic growth has slowed from a solid rate in Q4 and indicators are pointing to slowing growth in household consumption and business investment. New dot plot forecast revealed that 11 out of 15 US policy makers no longer believe that a rate hike is necessary this year which is a serious downgrade from the 2 rate hikes that were previously expected. GDP growth for 2019 has been cut from 2.3% to 2.1% and to 1.9% in 2020 from 2%.

This week we will have a great number of housing data, consumer confidence, trade balance data, final Q4 GDP reading and PCE inflation data.

Important news for USD:

Tuesday:

  • Housing Starts
  • Building Permits
  • Consumer Confidence Index

Wednesday:

  • Trade Balance
  • Exports
  • Imports

Thursday:

  • GDP
  • Pending Home Sales

Friday:

  • PCE
  • New Home Sales

EUR

Trade balance data for January came in at EUR17bn vs EUR15bn as expected. Both exports and imports rose with first coming in at 0.8% m/m and latter 0.3% m/m. ZEW survey of economic sentiment came in at -2.5 vs -18.7 as expected signalling that although the reading is in negative territory there are hopes that the worst is behind us as major economic risks are viewed as less dramatic now.

Preliminary manufacturing PMI for the Eurozone in March came in at 47.6 vs 49.5 as expected. The huge plunge in the number was driven by devastating manufacturing PMI from Germany that came in at 44.7 vs 48 as expected for the lowest reading since August 2012. French manufacturing PMI dipped into contraction coming in at 49.8. Services PMI came in as expected while composite was dragged lower by manufacturing data. EUR is lower across the markets against all of the majors as worries about the health of EU economy mount. Yields on German 10-year bond turn negative for the first time since October 2016.

This week we will have data on consumer confidence and sentiment for the EU as well as inflation, consumption and employment data from Germany.

Important news for EUR:

Monday:

  • Ifo Business Climate (Germany)

Thursday:

  • Economic Sentiment Indicator
  • Consumer Confidence Index
  • CPI (Germany)

Friday:

  • Retail Sales (Germany)
  • Unemployment Change (Germany)
  • Unemployment Rate (Germany)

GBP

Average weekly earnings came in at 3.4% 3m/y as the prior quarter but 3.2% 3m/y was expected so a nice beat there. The unemployment rate fell to 3.9% vs 4% as expected for an additional beat. Employment change came in at 222k vs 120k for a fantastic beat. Jobless claims change came in at 27k vs 14.2k the previous month for the only dent in strong employment report. In the normal circumstances this report would bump BOE toward raising the rates and push GBP higher, however due to uncertainties surrounding Brexit this report will not have that effect.

Inflation number for the month of February came in at 0.5% m/m as expected and 1.9% y/y vs 1.8% y/y. Core CPI came in at 1.8% y/y vs 1.9% y/y as expected. Data came in-line with expectations with small uptick in headline inflation being offset by small dip in core reading. Retail sales for the month of February came in at 0.4% m/m vs -0.4% m/m as expected. On the yearly level they are now at 4% y/y vs 3.3% y/y as expected. Another batch of stronger than expected data that will not have the desired effect due to the Brexit concerns. BOE has left the official bank rate unchanged as expected noting concerns regarding the Brexit process.

Parliament speaker John Bercow has ruled out the third meaningful vote stating that the UK government could not bring the same exact Brexit deal for another vote. PM May has written to EU seeking extension of Brexit until June 30 and officially announced it on Wednesday. That proposal was not accepted and Brexit is pushed back to at least April 12. This gives PM May a chance to organize a third meaningful vote and if it succeeds the UK will leave EU on May 22. If the vote fails new plan for leaving the EU has to be proposed by April 12. Alternatively, hard Brexit or long delay followed by new leadership can occur.

This week we will have final Q4 GDP reading and business investment as well as possible third meaningful vote on Brexit deal.

Important news for GBP:

  • Third Meaningful Vote (tentative)

Friday:

  • GDP
  • Business Investment

AUD

RBA meeting minutes noted “significant uncertainties” on the economic outlook. Scenarios for the rate moves are more evenly balanced than they had been last year and there is no strong case for near-term move in rates. Labour market continues to improve and unemployment is seen falling to 4.75%. Consumption outlook is uncertain due to the risk of further fall in housing prices.

Employment change showed 4.9k vs 15k as expected for a miss but the number was quickly offset by fall in the unemployment rate to 4.9% which is a huge positive since it moves toward RBAs projection. On the negative side we have a miss in the headline number, the fact that the number of full-time workers dropped and that rise in employment change was all due to part time employment change. Participation rate also ticked down to 65.6%.

This week on Sunday manufacturing and non-manufacturing data from China will be published.

Important news for AUD:

Sunday:

  • Manufacturing PMI (China)
  • Non-manufacturing PMI (China)

NZD

GDT price index came in at 1.9% for the eighth straight auction with higher prices. Q4 GDP came in at 0.6% q/q as expected with 2.3% y/y vs 2.5% y/y as expected. Main contributor to the GDP growth were service industries at 0.9%. Slowdown in the economy in H2 2018 is visible but it is not as big, therefore a rebound can be expected in Q1 2019 which pushes potential rate cut further in time.

This week we will have trade balance data, housing data and main event of the week will be RBNZ rate decision. It is expected that rate will stay the same. Recent data have indicated to the market that a possible rate cut will not come soon and now we will have a chance to hear RBNZ assessment of the incoming data.

Important news for NZD:

Monday:

  • Trade Balance
  • Exports
  • Imports

Wednesday:

  • RBNZ Interest Rate Decision
  • RBNZ Rate Statement

Thursday:

  • Building Permits

CAD

Canadian budget projections see this year’s deficit at CAD$14.9bn vs CAD$18.1bn the previous projection. GDP growth for 2019 is assumed at 1.8% for 2019 and 1.6% for 2020. There will be incentives on mortgage costs in an attempt to boost the falling housing market. Revenues will be used for social programs and transfers, including skill training, support for seniors and greater prescription coverage.

Wholesale trade in January came in at 0.6% m/m as expected with prior reading showing 0.3% m/m. January retail sales came in at -0.3% m/m vs 0.4% m/m as expected. Much weaker than expected reading with sales falling in 4 of 11 subsectors representing 52% of total retail trade. The main culprit for the drop in retail sales were motor vehicles and parts which dropped 1.5%. CPI for the month of February came in at 0.7% m/m vs 0.6% m/m as expected and 1.5% y/y vs 1.4% y/y as expected. All three core measures came in as expected: common and core at 1.8% y/y and trimmed at 1.9% y/y. Inflation figures can deter BOC for considering rate cuts, but now limelight is on growth which makes next week’s GDP reading all the more important.

This week we will have trade balance data and GDP for the month of January.

Important news for CAD:

Wednesday:

  • Trade Balance
  • Exports
  • Imports

Friday:

  • GDP

JPY

Trade balance data for the month of February came in at JPY339bn vs JPY305.1bn as expected. Nice beat on the reading but it was caused by imports falling faster than exports. Imports fell -6.7% y/y which is a biggest drop in last 2 years while exports fell -1.2% y/y which although still negative is a big improvement from the prior month when they were -8.4% y/y. Cars and semiconductors were the main culprit for falling exports. Exports to US, China and Europe all rose, exports to Asia fell. Industrial production for the month of January came in at -3.4% m/m vs -3.7% m/m as expected and 0.3% y/y vs 0% y/y as expected. Slightly better figures but still very weak reading.

National inflation for the month of February came in at 0.2% y/y vs 0.3% y/y as expected. Ex-food came in at 0.7% y/y vs 0.8% y/y as expected and ex-food and energy came in at 0.4% y/y as expected. All are miles away from targeted 2%. Preliminary manufacturing PMI came in unchanged at 48.9. Slowing demand from domestic and international markets caused the sharpest cutback in output volumes in almost three years. New orders component plunged as well.

This week we will have data on inflation from Tokyo area, employment and consumption data as well as industrial production data.

Important news for JPY:

Friday:

  • Tokyo area CPI
  • Unemployment Rate
  • Jobs to Applicants Ratio
  • Retail Sales
  • Industrial Production

CHF

February trade balance came in at CHF3.13bn vs CHF3.04bn the previous month. Exports rose 1.3% m/m while imports fell -3% m/m. Steady rise in exports is satisfying.

SNB has left interest rate unchanged as expected. They stated that CHF remains highly valued and that situation in FX markets remains fragile. Downgrades have been made to inflation and it is now seen at 0.3% for 2019 and 0.6% for 2020. Governor Jordan stated that negative rates remain an important instrument for the foreseeable future.

You can follow all economic events on the Economic Calendar page on our Website. MT4 server time is set to GMT + 2 and if you need assistance converting MT4 server time to your local time you can use some of the online time converters such as WorldTimeBuddy.

Please note that this analysis should not be used as investing advice as it is only an overview of the economic events influencing the markets.
Please remember that MT4.VAR. and MT4.ECN. accounts have Market Execution. Please note how Execution works during high impact news and other times of low liquidity.

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