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Forex Weekly Outlook Mar 30-Apr 3

The US dollar managed to fight back and correct part of the correction. In the week that ends with Good Friday, we have a buildup towards the all important US Non-Farm Payrolls as well as Canadian GDP, US Consumer Confidence and more events. Join us as we explore the top events of this week.

The US labor market continued to improve with a decline in the number of jobless claims, reaching 282,000. Also inflation figures were OK and new home sales beat. However, the final GDP release for the fourth quarter of 2014 slightly disappointed remaining unchanged at 2.2%, below the 2.4% forecast and durable goods orders also fell short of predictions. In the euro-zone, we had upbeat data from Germany but that wasn't enough for EUR/USD to settle over 1.10. In the UK, retail sales shined but inflation hit a round 0%, and cable is still looking for a direction. Japanese inflation also looks weak and could trigger action from the BOJ. The C$ was attentive to oil prices related to the crisis in Yemen, while the Aussie watched developments in China.

Updates:

  1. Canada GDP: Tuesday: 12:30. The Canadian economy expanded 0.3% in December, exceeding analysts' expectations for a 0.2% gain. The reading was preceded by a 0.2% contraction in November. On a yearly base, GDP edged up 2.5% in 2014. The annual growth rate in the fourth quarter reached 2.4%, below the 3.2% posted in the third quarter. Household spending continued to be the main force in the Canadian economy increasing consumption expenditure by 2.0% on an annualized basis. Exports of goods fell 2.5%, exports of crude oil declined 6.5% and exports of refined petroleum products slumped 36.3%. Economists forecast a 0.2%growth rate in January.
  2. US CB Consumer Confidence: Tuesday, 14:00. Consumer confidence declined more than expected in February reaching 96.4 from 103.8 in January. Economists expected a smaller drop to 99.6. Current declined to 110.2 from a revised 113.9 in January. Consumer outlook for the next six months dropped to 87.2 from a revised 97.0. Consumers were less optimistic about job prospects. However, despite the lower figures, the general level show positive trend. Consumer confidence is predicted to reach 96.6 in March.
  3. US ADP Non-Farm Employment Change: Wednesday, 12:15. The U.S. private sector gained 212,000 jobs in February following an upwardly revised reading of 250,000 in the previous month. The release was below expectations. The manufacturing and the services sectors improved the most. However, despite the weaker job gain, the private sector's outlook remains bright. Analysts expect a 231,000 job gain in the US private sector for March.
  4. US ISM Manufacturing PMI: Wednesday, 14:00. The US manufacturing sector weakened in February, dropping 0.6 points to 52.9. The reading was worse than the 53.4 points forecasted by analysts, however, the reading remained above the 50 point line, indicating continued growth. New orders fell 0.4 points to 52.5 while factory activity dropped from 56.5 in January to 53.7. Manufacturing employment also slipped from 54.1 to 51.4. Manufacturing exports continued to contract in February to 48.5, while imports softened, from 55.5 to 54. US manufacturing PMI is expected to reach 52.5 this time.
  5. US Trade Balance: Thursday, 12:30. The U.S. trade deficit narrowed in January to $41.8 billion amid weakening in exports and imports. The 8.3% fall was broadly in line with market forecast. Imports contracted due to lower oil prices and labor strikes disrupting shipping of goods. Exports fell $5.6 million to $189.4 billion while imports dropped $9.4 billion to $231.1 billion. However, domestic production increased due to low oil prices and petroleum imports fell 23% to $17.7 billion. The U.S. trade deficit is expected to contract further to $41.5 billion.
  6. US Unemployment Claims: Thursday, 12:30. The number of Americans filing initial claims for unemployment benefits declined more than expected last week, reaching 282K after a 291,000 addition in the prior week. The 9,000 drop continues to suggest an ongoing improvement in the US job market despite the recent volatility due to the harsh weather, softer global demand and the strong dollar. The four-week moving average fell 7,750 to 297,000 last week. The number of jobless claims is expected to reach 285,000 this week.
  7. US Non-Farm Payrolls and Unemployment rate: Friday, 12:30. U.S. job creation strengthened in February rising 295,000 and lowering jobless rate to a more than 6-1/2 year low of 5.5%. Job gain was stronger despite harsh weather conditions disrupting activity. The report supported the Fed's rate hike move planned in June. Average hourly earnings edged up by three cents and further gains are expected. The employment to population ratio in the US labor market has been steady at a 5-1/2 year high of 59.3%. US private sector is expected to gain 251,000 positions while the unemployment rate is expected to remain at 5.5%.

*All times are GMT.