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Forex Major Currencies Outlook (Apr 5 – Apr 9)

A calm week ahead of us with thin liquidity on Easter Monday will bring RBA meeting, ISM Non-Manufacturing PMI and employment data from Canada. Vaccine roll-out developments and covid related news will be on the minds of investors.


President Biden announced new infrastructure plan worth $2.25 trillion which will be funded fully by tax hikes. Infrastructure building will be done solely by the US corporations. Tax rate on corporations is proposed to rise to 28% from 21% currently. This will lead to lower issuance of government bonds, treasuries, and assuming demand for bonds stays the same, it should lead to rise in treasury prices, drop in treasury yields and consequently lower USD. 

ISM Manufacturing PMI for March beat expectations and came in at 64.7 for the highest reading since 1983! New orders rose to astonishing 68 from 64.8 in February thus making the highest reading since 2004. Employment sub index rose to 59.6 from 54.4 in February. A small dent in otherwise great reading is that prices paid sub index dropped less than expected. It came in at 85.6 from 86 in February. The report shows booming demand for manufacturing products. 

Headline NFP number for March came in at 916k vs 660k as expected. The unemployment rate was pushed down to 6% as was expected from 6.2% in February while participation rate ticked up to 61.5%. The underemployment rate continued to drop and now came in at 10.7%. The drop in average wages is a result of lower paying workers returning to work as the leisure and hospitality sector led the way. Overall, a very strong reading that leaves potential for equally strong readings in the months to come. 

This week we will have ISM Non-Manufacturing PMI and data from the latest Fed meeting. 

Important news for USD: 


  • ISM Non-Manufacturing PMI


  • FOMC Minutes 


Sentiment data in March surpassed expectations. Economic sentiment rose to 101 from 93.4 in February while industrial sentiment went into positive after more than 14 months. It came in at 2 vs -3.1 the previous month. Optimism is prevailing as economic rebound should pick up from Q2 and especially from H2. 

After higher-than-expected jumps in German and Spanish inflation preliminary March Eurozone inflation came in at 1.3% y/y vs 1.4% y/y as expected. The rise is mostly due to the rising energy prices compared with March of 2020. When we take away energy, we see that core reading came in at 0.9% y/y vs 1.1% y/y as expected due to a drop in goods inflation. Considering constraints on supply chains we can see this drop in goods inflation only as transitory and we expect it to pick up in Q2. ECB is prepared to look-through overshooting inflation and this weak reading will be easily dismissed by them. 

German authorities have banned the use of AstraZeneca's vaccine for people under 60 due to new cases of blood clots. 


Final reading of Q4 GDP showed an improvement to 1.3% q/q vs 1% q/q as preliminary reported. The increase was due to the strong rise in business investment (5.9% q/q vs 1.3% q/q in the first reading) and modest rise in government spending (6.7% q/q vs 6.4% q/q in the first reading). Private consumption, on the other hand, dropped -1.7% q/q vs -0.2% as preliminary reported.


JobKeeper, an employment subsidy introduced to help mitigate effects of pandemic, ended on March 28. Westpac estimates that it puts 100k people at the risk of losing jobs. They expect that these loses will be spread over the coming months pushing the unemployment rate up. Retail sales in February dropped -0.8% m/m but came in at 9.1% y/y.

Official PMI numbers from China easily beat expectations with manufacturing coming in at 51.9 and services jumping to 56.3 from 51.4 in February. Those numbers pushed composite reading to the very healthy 55.3 level. Within manufacturing reading both new orders and new export orders rebounded. New orders category posted a stronger reading indicating that domestic demand is leading the recovery. Within services, construction measure hit 62.3 level, it shows infrastructure investment that was announced in the Two Sessions. Caixin manufacturing reading showed a different picture as it fell to 50.6 while rise to 51.4 was expected. Rising input costs have impeded manufacturing activity. Although it is in the expansion for almost a year it is getting dangerously close to dropping below the 50 level.

This week we will have RBA meeting. No changes to cash rate and monetary policy are expected

Important news for AUD:


  • RBA Interest Rate Decision


ANZ survey of the business confidence in March show the reading drop to -4.1 from being flat the previous month. ANZ noted that “All forward-looking activity indicators were lower in the second half of the month. The preliminary results would not have captured the full lockdown impact”. They also added that “as the demand overshoot wanes and the tourists are missed more and more, the economy will go largely sideways this year”.


GDP for the first month of 2021 came in at 0.7% m/m vs 0.5% m/m as expected. Healthy beat indicating that Canada will post a positive Q1 GDP reading. Wholesale and manufacturing led the way and were the biggest contributors while retail was a drag, dropping for the third time in last 4 months.

This week we will have employment data.

Important news for CAD:


  • Employment Change
  • Unemployment Rate


February employment report showed that the unemployment rate remained at 2.9% while expectations were for it to tick up to 3%. Retail sales for the same period crushed expectations and came in at 3.1% m/m vs 0.8% m/m as expected. BOJ Tankan survey showed improvement for both large and small manufacturing and non-manufacturing business. Capex is now seen rising 3% instead of -1.4% as was expected. Businesses reported that they see USDJPY at 106.71 in 2021 and EURJPY at 123.1. These are average values for 2021 fiscal year, from April 2021 to March 2022. CPI is seen at 0.4% for 2021, 0.8% in 3 years’ time and 1% in 5 years’ time. Nowhere close to BOJ’s 2% target level.


SNB total sight deposits for the week ending March 26 came in at CHF702.7bn vs CHF702.9bn the previous week. SNB is on the cruise control as markets keep Swissy subdued. Inflation in March missed expectations. Headline CPI came in at -0.2% y/y while core CPI plunged deeper into deflation with -0.4% y/y. Retail sales in February showed a big drop of -6.3% y/y vs -0.7% y/y in January. Both inflation and consumption affirm the need for SNB’s accommodative monetary policy.

You can follow all economic events on the Economic Calendar page on our Website. MT server time is set to GMT+3 and if you need assistance converting MT 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 our accounts have Market Execution. Please note how Execution works during high impact news and other times of low liquidity.

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