The U.S. dollar made a comeback after 3 weeks of falls, as the FOMC minutes cast doubts on the chances of QE3. A speech by Ben Bernanke, U.S. trade balance and unemployment claims are the major events this week. Here is an outlook on the main market movers lined up.
Last week the United States gained only 120K non-farm jobs in March while the unemployment rate continued dropping to 8.2%. This publication hurt the dollar and raised the chances of QE3 once again. Bernanke might provide some fresh insight now. In Europe, things remain shaky as well, especially in Spain, which struggles with the bond markets. Let’s start:
- Ben Bernanke speaks: Monday, 23:15. Ben Bernanke head of the Federal Reserve is scheduled to speak inStone Mountain. He is likely to refer to the unexpected weak NFP (although it’s important to note 5 reasons why it might be temporary). He warned in his past speeches that the market is out of sync with the wider economy indicating the job market is still fragile.
- Japan Rate decision: Tuesday Bank of Japan maintained its benchmark interest rate at 0.10% and kept its monetary policy unchanged on its last meeting. BOJ Governor Masaaki Shirakawa said the bank will maintain its efforts to beat deflation but stressed that the government and private sector must also do their share to boost the country’s potential growth. No change is expected now.
- Australia Employment data: Thursday, 1:30. Australia’s job market contracted in February losing 15,400 jobs lifting unemployment rate to 5.2% from 5.1% in January. These negative figures suggest the strong Aussie burdens the Australian economy and rate cuts are likely to occur in the coming months. An addition of 6,700 jobs is expected while unemployment rate is predicted to rise reaching 5.3%.
- U.S. PPI : Thursday, 12:30. Producer price inflation climbed in February by 0.4% from 0.1% in January amid higher energy costs while core PPI rose moderately by 0.2% in line with predictions, after a 0.4% increase in January. The PPI is climbing more than the Fed anticipated however they claim that the rise in energy prices is only temporary. These readings together with the improvement in the job market diminish the chances for additional QE. An increase of 0.3% is expected this time.
- U.S. Trade Balance: Thursday, 12:30. The U.S. trade deficit edged up to the highest level in more than three years in January reaching $52.6 billion, as imports hit record high. Meanwhile, U.S. exports to Europe dropped amid the EU debt crisis raising concerns about its affect on U.S. economic growth. Imports climbed 2.1% to $233.4 billion while exports increased 1.4% to $180.8 billion. A National Association for Business Economics forecasting panel anticipated deficit to narrow in 2012 by 4.1% to $535.4 billion and continue to drop in 2013. Deficit is expected to narrow to $51.9 billion.
- U.S. Unemployment Claims: Thursday, 12:30. The number of Americans seeking unemployment benefits dropped to a four-year low last week to a seasonally adjusted 357,000 from363,000 in the prior week in light of reduced layoffs and the a major improvement in the U.S. job market. A further drop to 355,000 is expected now.
- U.S. inflation data: Friday, 12:30. CPI inflation edged up 0.4% in February, following 0.2% rise in the previous month, amid a surge in energy costs. However core rate, softened rising lower than predicted with 0.1% climb after 0.2% in January. The Fed claim the rise in energy product is temporary and CPI is predicted to decline on the coming months. CPI and Core CPI are predicted to rise by 0.2%.
- U.S. Prelim UoM Consumer Sentiment: Friday, 13:55. U.S. consumers were less optimistic in March in light of the recent surge in energy prices. The reading was 17% lower than in January reaching 74.3 from 75.3. This figure was lower than the 75.8 predicted by analysts. Nevertheless, the figure is still elevated indicating optimism among U.S. consumers. A further increase to 76.5 is anticipated.
- Ben Bernanke speaks: Friday, 17:00. Ben Bernanke head of the Federal Reserve is scheduled to speak in New York. His words bring high volatility to the market.
*All times are GMT.