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Forex Major Currencies Outlook (Apr 18 – Apr 22)

Preliminary PMI data from Eurozone and the UK coupled with inflation data from Canada and New Zealand along with Q1 GDP reading, production and consumption data from China will be the most watched economic releases of the week.


March inflation data posted a new 40-year high and showed CPI rise to 8.5% y/y vs 7.9% y/y in February and 1.2% m/m vs 0.8% m/m the previous month. Core CPI came in at 6.5% y/y vs 6.6% y/y as expected but up from 6.4% y/y in February. Gasoline was the main contributor with a whopping 18% y/y increase with energy overall rising 11% y/y. Used vehicles dropped -3.8% m/m which may be a harbinger of inflation nearing the peak. With oil prices falling due to lower demand and SPR release we may see gasoline prices slowing down and dragging the inflation down. 

Retail sales in March posted a gain of 0.5% m/m vs 0.6% m/m as expected with February reading being revised up to 0.8% m/m from 0.3% m/m as reported. Sales at gasoline stores led the way with big surge in gasoline prices. Electronic store sales and clothing followed suit. The drops were seen in non-store and car sales. Yield on 10y Treasuries has started the week at a high of 2.78% and then proceeded up to 2.83%. FedWatchTool sees the probability of a 50bp rate hike in May at 91%. 


ECB has left key interest rates unchanged as expected. The Governing Council has reiterated that APP will conclude in Q3. Monthly net purchases under the APP will amount to €40 billion in April, €30 billion in May and €20 billion in June. The statement said that rate hikes will come “some time” after the end of APP. The Governing Council will continue reinvesting, in full, the principal payments from maturing securities purchased under the APP for an extended period of time even after the key ECB interest rates have been rates. Principal payments of PEPP will be reinvested until at least the end of 2024. Optionality, flexibility and data dependence when deciding on future moves has been emphasized. At the press conference ECB President Lagarde clarified the phrase “some time” as ranging from a week to few months. 

This week we will have preliminary PMI readings for April. 

Important news for EUR: 


  • Manufacturing PMI (EU, Germany, France)
  • Services PMI (EU, Germany, France)
  • Composite PMI (EU, Germany, France)


March employment report showed more tightness in the labour market. Claimant count change came in at -46.9k with the ILO unemployment rate slipping to 3.8%. Average wages, regular and ex bonus, are rising due to skill shortages and are trying to keep up with the speeding inflation. They came in at 5.4% y/y and 4% y/y respectively. The employment is above the pandemic levels and the unemployment rate returned to levels seen before the pandemic. Inflation data posted a new record high in the 30 years that data is recorded. Headline number came in at 7% y/y vs 6.7% y/y as expected and up from 6.2% y/y in February with a 1.1% m/m increase. Core came in at 5.7% y/y vs 5.4% y/y as expected and up from 5.4% y/y the previous month. Gas and electricity price increases were the main contributors.

This week we will have preliminary PMI readings for April as well as consumption data.

Important news for GBP:


  • Manufacturing PMI
  • Services PMI
  • Composite PMI
  • Retail Sale


March employment report can be assessed as a decent one. Employment change came in at 17.9k vs 40k as expected. Both the unemployment rate and participation rate where unchanged at 4% and 66.4% respectively. The unemployment rate is at its 14-year low. Another big positive from the report is that all of the jobs added were full-time (20.5k). Part-time employment came in at -2.6k. Signs of a tight labour market are persistent. We think that RBA will wait for data from the CPI reading in two weeks as well as wage growth data on May 19 before deciding to act. Elections will be held in late May so we stick with our call that although inflation will be high they will not act before June.

Inflation in China started to accelerate in March and came at 1.5% y/y vs 1.2% y/y and up from 0.9% y/y in February. The number is still very low compared with other countries around the word, excluding Japan, so it should not deter PBOC from acting to further ease monetary policy conditions and spur the economy. PPI came in at 8.3% y/y, larger than 7.9% y/y as expected, but still down from 8.8% y/y in February. Trade balance data showed a big decline in trade surplus as it came in at $47.4bn vs $115.95bn the previous month. Exports were down to 14.7% y/y while imports shrunk -0.1% y/y indicating deterioration in domestic demand caused by reintroduction of covid restrictions, exacerbating supply chain disruptions and Russia – Ukraine conflict. ING analyst Iris Pang stated that a drop in imports cannot be attributed to those factors alone and according to her the main culprit is oil imports. They plunged 8.1% y/y.

This week we will have minutes from the RBA meeting as well as Q1 GDP reading, production and consumption data from China.

Important news for AUD:


  • GDP (China)
  • Industrial Production (China)
  • Retail Sales (China)


  • RBA Meeting Minutes


RBNZ has stepped up and delivered a 50bp rate hike, thus bringing the OCR to 1.5%. NZD gained on the announcement but as the details of how board members assessed the situation arrived NZD’s fortunes reversed. Members noted that 50bp rate hike now provides more flexibility to the policy ahead in light of the highly uncertain global economic environment. Although the committee confirmed that further increases in the OCR are needed in order to meet their mandate it seems that they are front loading the rate hikes now and then waiting to see how things in global economy and at home will develop before acting again. Markets have characterized this as a “dovish hike” and that sent NZD down. Minutes of the meeting also show that members expect inflation to peak at around 7% in H1 of 2022.

This week we will have Q1 inflation data.

Important news for NZD:


  • CPI


BOC delivered a much anticipated 50bp rate hike and brought cash rate to 1%. Unlike the RBNZ statement that was delivered few hours earlier it did not show any signs of dovish rhetoric. They will cease buying government bonds on April 25 thus effectively starting the QT program. BOC members opted to let assets mature and since almost half of their holding mature in less than two years it will represent a fast reduction in their balance sheet. New projections see CPI averaging 6% during H1 of 2022 and then gradually declining to 2.5% in the H2 of 2023 and 2% level as we get into 2024. Projections for GDP see it at 4.25% in 2022, 3.25% in 2023, and 2.25% in 2024. Opening statement of Monetary Policy Report Press Conference presented three main messages. First, the Canadian economy is strong. Second, inflation is too high. Third, higher interest rates are needed as they are main policy instrument to bring inflation down to 2%. The third point may indicate that we could see additional 50bp rate hike at June meeting.

This week we will have inflation data.

Important news for CAD:


  • CPI


The ongoing covid difficulties have led BOJ to downgrade assessment for 8 out of 9 regions while leaving the outlook for ninth unchanged. PPI data for March showed a rise of 9.5% y/y vs 9.3% y/y as expected. Additionally, wholesale index in March is at 112, which is the highest reading in 40 years. Price pressures are mounting everywhere in Japan except in the CPI numbers which remain conspicuously low. Core machinery orders, a proxy used for capex in the next 6 months, plunged in February almost 10% (-9.8% m/m). This could mean that business decided to delay investments during the pandemic induced restrictions which will have negative impact on GDP for the year.


SNB total sight deposits for the week ending April 8 came in at CHF739.4bn vs CHF737.2bn the previous week. SNB continued to intervene in the markets as the EURCHF got closer to the parity, finishing the week at around 1.015 level.

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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