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Forex Major Currencies Outlook (Mar 9 – Mar 13)

ECB meeting will dominate the otherwise slow week with economic data followed by GDP readings from EU, UK and Japan and unavoidable coronavirus news.


ISM manufacturing PMI in February came in barely above boom level at 50.1 vs 50.9 the previous month. New orders and prices paid dropped into contraction, production dropped but stayed in expansion while employment showed a small improvement but still well below the 50 level. ISM Non-manufacturing PMI painted a different picture, smashing the expectations and coming in at 57.3 vs 54.9 as expected. Main drivers were employment, new orders and new export orders categories. This is the highest reading since February of 2019 and since the US economy is much more services oriented this is a great reading. 

Fed surprised the markets with 50bp rate cut delivered in between the meetings, putting the rate at 1% to 1.25%. The cut was delivered in order to ease the economic disruption caused by the virus outbreak. Chairman Powell quickly added that US fundamentals are strong and that a rate cut was necessary due to the emergency situation. He added that move should provide a meaningful boost to the economy. Markets are now pricing an additional 50bp rate cut at the March meeting as yields on 10-year treasuries fell below 0.80%. The House of Representatives approved $8.3bn emergency spending to cope with the virus, thus adding fiscal support on top of the monetary one. 

NFP numbers for February smashed the expectations coming in at 273k vs 175k as expected with previous reading being revised upwards to 273k as well. The unemployment rate ticked back down to 3.5% with participation rate staying the same at 63.4%. Average hourly earnings climbed to 0.3% m/m from 0.2% m/m the previous month. The underemployment rate was the only weak point in the report climbing to 7% from 6.9% the previous month. Trade balance in January came in at $-45.3bn vs -46.1bn as expected. Exports were down -0.4% m/m while imports showed even bigger drop coming in at -1.6% m/m. Trade deficit with China increased compared to the previous month but it decreased compared to the previous year. 

This week we will have inflation data. 

Important news for USD: 


  • CPI 


Final manufacturing PMI for EU improved slightly to 49.2 from 49.1 preliminary. Both German and French readings improved as well but on the back of rise in deliveries sub index, which indicates a serious disruption in supply chains. The new orders category continued to decline. Services PMI came in at 52.6 vs 52.8 preliminary due to the drop in German services reading. Composite came in at 51.6 as preliminary reported. Retail sales bounced back in January coming in at 0.6% m/m from -1.1% m/m in December with yearly reading staying the same at 1.7% y/y. 

Preliminary inflation in February came in at 1.2% y/y as expected, a drop from 1.4% y/y in January due to a drop in energy prices, but the core CPI climbed to 1.2% y/y from 1.1% y/y the previous month. G7 meeting showed the willingness of central bankers and finance ministers to use all appropriate policy tools, including fiscal measures, to achieve strong growth. However, the fiscal measures will be used only where it is deemed as appropriate meaning there will be no coordinated action and that there is no push for Germany to loosen up their fiscal policy. Italy has pledged to provide a fiscal boost to its economy which will grow her debt to 2.4% of GDP. The EU commission expects to downgrade GDP forecasts and that Italy and France face risk of technical recession. 

This week we will have final Q4 GDP reading and industrial production data. ECB meeting will be closely watched. The markets are pricing 7bp out of 10bp rate cut. 

Important news for EUR: 


  • GDP


  • Industrial Production
  • ECB Interest Rate Decision
  • ECB Monetary Policy Press Conference 


Final manufacturing PMI for February came in at 51.7 up from 50 the previous month. Services came in a bit weaker from the previous month coming in at 53.2 vs 53.9 which brought down composite to 53 vs 53.3 the previous month. 

This week we will have GDP, trade balance and industrial data as well as information about budget that will be published on March 11. 

Important news for GBP: 


  • GDP
  • Trade Balance
  • Manufacturing Production
  • Industrial Production
  • Construction Output 


RBA has cut the interest by 25bp and it now stands at 0.50%. Coronavirus outbreak and the need to support the economy have been cited as the main reasons for the cut. Coronavirus has been blamed for everything starting with the delay in progress on jobs and inflation to global slowdown. They also stated that it is too early to assess the effects of the virus and at what point will the global activity pick up. The housing market seems to have reached a turnaround as the latest abysmal housing data show. AUD has jumped on the news as markets were expecting a 50bp cut. RBA deputy governor, Guy Debelle stated that RBA has room for one more rate cut and after that they will have to consider introducing QE. Markets are pricing almost 97% chance for a rate cut at April’s meeting. 

Q4 GDP came in at 0.5% q/q vs 0.4% q/q and 2.2% y/y vs 2% y/y as expected. Household consumption and change in inventories were the biggest contributors while private capital formation was the biggest drag. Government spending contributed to more than half of the yearly figure. Trade balance figures for January came in at AUD5.21bn vs AUD4.8bn as expected. Both exports and imports were -3% m/m. Exports to China have fallen again and in February and March they will continue to drop and hurt the trade balance. January retail sales came in at -0.3% m/m vs flat as expected. Bad start of the year for retailers caused by the raging wildfires at the time. 

Official PMI data from China disappointed even with the bar being set very low. Manufacturing PMI plunged to 35.7 vs 45 as expected while non-manufacturing PMI collapsed to 29.6 vs 51 as expected. Composite reading was dragged down to 28.9, a record low, showing the full impact of work stoppage caused by coronavirus. Caixin PMI manufacturing showed a decline to 40.3 vs 45.7 as expected with record falls in new orders, employment and output components. Caixin services plunged to 26.5 which dragged down composite to 27.5, both readings are record lows. New orders, new export orders and employment category dropped. 

This week we will have inflation data from China. 

Important news for AUD: 


  • CPI (China)
  • PPI (China) 


GDT price index again came in negative (-1.2%), however a positive trend is forming and prices should move to the positive within the couple of next auctions. Butter Milk Powder (-4.8%) and Cheddar (-4.7%) where the main drags. Kiwi has gained grounds during the week against USD due to the dollar weakness and NZDUSD stood above 0.63 level.

This week we will have data on card spending.

Important news for NZD:


  • Electronic Card Retail Sales


BOC has followed Fed’s lead and cut rates by 50bp, bringing it down to 1.25% citing that outlook is now clearly weaker than it was in January. Markets were expecting a 25bp cut so this move weighed heavily on CAD sending USDCAD to 1.34 and beyond. Business activity has fallen sharply in some regions and supply chains have been disrupted. They expect business activity and consumer confidence to further drop as the virus spreads. Rail line blockades, strikes by Ontario teachers, and winter storms in some regions are additional factors slowing economic activity in the first quarter.

Employment change in February came in at 30.3k vs 11k as expected. The unemployment rate stayed at 5.6% with participation rate climbing to 65.5%. Full-time employment was 37.6k while part-time was -7.3. Hourly wage rate jumped to 4.3% from 3.9% the previous month. Overall a very strong employment report with wages and full-time employment leading the way. Trade balance deficit widened in January coming in at -CAD1.47bn. Exports have fallen by 2% m/m while imports dropped by 0.5% m/m. Exports declined in 9 out of 11 sectors while imports declined in 6 out of 11 sectors. Motor vehicles showed the biggest drop in exports and consumer goods showed the biggest drop in imports.


Final February manufacturing PMI came in at 47.8, a bit better than preliminary reading of 47.8. New orders category showed a biggest drop since late 2012. Firms have cut production due to the slowdown in global demand. Services came at 46.8 and put composite PMI down into contraction at 47. Business activity suffered a biggest drop since 2014 due to fall in tourism caused by the virus. Capex for Q4 came in at -3.5% vs -2.5% as expected with ex-Software category showing even bigger drop of -5% vs -2% as expected. Newly published data will cause downward revision to next week’s Q4 GDP.

Earnings data for January showed a surprising rise in wages to 1.5% y/y vs 0.2% y/y as expected and up from being flat in December. Although base wages did increase, the real push came from bonuses that jumped 10.2%. The rise in wages did not fully transition into consumption as household consumption numbers came in at -3.9% y/y vs -4.8% y/y the previous month for the fourth consecutive month with negative reading.

This week we will have final Q4 GDP reading.

Important news for JPY:


  • GDP


Q4 GDP came in at 0.3% q/q vs 0.2% q/q as expected and 1.5% y/y vs 1.3% y/y as expected. On the inflation side, headline CPI in February came in at -0.1% y/y vs 0.1% y/y as expected but core CPI stood the ground at 0.2% y/y.

This week we will have employment data.

Important news for CHF:


  • Unemployment Rate

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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