The Trading Week: Apr. 4 - Apr. 8
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Apr. 2, 2011 (Allthingsforex.com) – With the unexpectedly hawkish rhetoric from Fed officials grabbing the financial headlines in recent days, in the week ahead traders will pay close attention to the monetary policy meetings of four major central banks as the euro takes the center stage in anticipation of a 25 bps rate hike by the European Central Bank.
In preparation for the new trading week, here is a list of the Top 10 spotlight economic events that will move the markets around the globe.
1. AUD- Reserve Bank of Australia Interest Rate Announcement, Tues., Apr. 5, 12:30 am, ET.
The Reserve Bank of Australia is forecast to keep the benchmark rate unchanged at 4.75%, but it would be interesting to find out if policy makers would express concerns about the inflation thread from rising commodity prices and wages, which could fuel speculation of further interest rate increases in the near future.
2. USD- U.S. ISM Non-Manufacturing Index, a leading indicator of economic conditions in the services industries: agriculture, mining, construction, transportation, communications, wholesale trade and retail trade, Tues., Apr. 5, 10:00 am, ET.
The ISM Non-Manufacturing Index could deliver a welcomed sign that the recovery is gaining traction with activity in the services industries expanding for another month to 60.0 from a previous reading of 59.7.
3. USD- U.S. FOMC Meeting Minutes, a detailed record of the Fed’s last monetary policy meeting that may provide an outlook on the economy, inflation and the Fed’s future monetary policy, Tues., Apr. 5, 2:00 pm, ET.
The minutes from the Fed’s latest meeting should offer more details on the policy makers’ decision to keep the benchmark fed funds target rate at a range of 0.00% to 0.25% and to continue the second round of quantitative easing, despite of the acknowledgement that "the economic recovery is on a firmer footing, and overall conditions in the labor market appear to be improving gradually.”
4. EUR- Euro-zone GDP- Gross Domestic Product, the main measure of economic activity and growth, Wed., Oct. 6, 5:00 am, ET.
The final reading of the Euro-zone GDP is forecast to confirm the previous estimates that the economy grew by 0.3% in the fourth quarter of 2010.
5. AUD- Australia Employment Situation and Unemployment Rate, the main gauge of employment trends and labor market conditions, Wed., Oct. 6, 9:30 pm, ET.
The Australian economy is forecast to add up to 23,000 new jobs, compared with the 10,000 jobs lost in the month before, while the unemployment rate remains unchanged at the low 5.0% level.
6. JPY- Bank of Japan Interest Rate Announcement, Thurs., Apr. 7, expected around 12:00 am, ET.
In light of the earthquake, the tsunami and the thread of a nuclear meltdown, the Bank of Japan is expected to maintain the benchmark rate at the low 0.10% level and to continue to stimulate the economy. Moreover, compared with other central banks, the Bank of Japan now looks like the least likely candidate to exit its accommodative monetary policy, which could reinstate the yen’s position as a main funding currency for carry trades.
7. GBP- Bank of England Interest Rate Announcement, Thurs., Apr. 7, 7:00 am, ET.
The market has been pricing a Bank of England rate hike for a while now and the GBP could continue to attract some bids ahead of the April 7 meeting. However, if the Bank of England decides to sit on the sidelines for another month, the GBP could come under pressure, especially if the hawkish rhetoric from Fed officials increases.
8. EUR- European Central Bank Interest Rate Announcement, Thurs., Apr. 7, 7:45 am, ET.
Although the European Central Bank could raise rates by 25 bps on April 7, the market may have already fully priced it into the EUR exchange rate. The single currency could stay supported ahead of the ECB meeting but if the central bank does not open the door to further rate hikes, the EUR could see some profit taking following the announcement as the market’s attention shifts to Portugal’s debt obligations coming due on April 15.
9. USD- U.S. Jobless Claims, an important gauge of employment trends and labor market conditions, Thurs., Apr. 7, 8:30 am, ET.
The trend of improvement in the weekly jobless claims could continue with first-time applications for unemployment benefits forecast to reach 382K from 388K in the previous week. To indicate a significant decline in unemployment, economists estimate that jobless applications would need to fall to 375K or below.
10. CAD- Canada Employment Situation and Unemployment Rate, the main gauge of employment trends and labor market conditions, Fri., Apr. 8, 7:00 am, ET.
Following the lesser-than-expected 15,100 jobs created in February, the Canadian economy could add up to 29,000 K new jobs in March, while the unemployment rate inches lower to 7.7% from 7.8% in the previous month.
In preparation for the new trading week, here is a list of the Top 10 spotlight economic events that will move the markets around the globe.
1. AUD- Reserve Bank of Australia Interest Rate Announcement, Tues., Apr. 5, 12:30 am, ET.
The Reserve Bank of Australia is forecast to keep the benchmark rate unchanged at 4.75%, but it would be interesting to find out if policy makers would express concerns about the inflation thread from rising commodity prices and wages, which could fuel speculation of further interest rate increases in the near future.
2. USD- U.S. ISM Non-Manufacturing Index, a leading indicator of economic conditions in the services industries: agriculture, mining, construction, transportation, communications, wholesale trade and retail trade, Tues., Apr. 5, 10:00 am, ET.
The ISM Non-Manufacturing Index could deliver a welcomed sign that the recovery is gaining traction with activity in the services industries expanding for another month to 60.0 from a previous reading of 59.7.
3. USD- U.S. FOMC Meeting Minutes, a detailed record of the Fed’s last monetary policy meeting that may provide an outlook on the economy, inflation and the Fed’s future monetary policy, Tues., Apr. 5, 2:00 pm, ET.
The minutes from the Fed’s latest meeting should offer more details on the policy makers’ decision to keep the benchmark fed funds target rate at a range of 0.00% to 0.25% and to continue the second round of quantitative easing, despite of the acknowledgement that "the economic recovery is on a firmer footing, and overall conditions in the labor market appear to be improving gradually.”
4. EUR- Euro-zone GDP- Gross Domestic Product, the main measure of economic activity and growth, Wed., Oct. 6, 5:00 am, ET.
The final reading of the Euro-zone GDP is forecast to confirm the previous estimates that the economy grew by 0.3% in the fourth quarter of 2010.
5. AUD- Australia Employment Situation and Unemployment Rate, the main gauge of employment trends and labor market conditions, Wed., Oct. 6, 9:30 pm, ET.
The Australian economy is forecast to add up to 23,000 new jobs, compared with the 10,000 jobs lost in the month before, while the unemployment rate remains unchanged at the low 5.0% level.
6. JPY- Bank of Japan Interest Rate Announcement, Thurs., Apr. 7, expected around 12:00 am, ET.
In light of the earthquake, the tsunami and the thread of a nuclear meltdown, the Bank of Japan is expected to maintain the benchmark rate at the low 0.10% level and to continue to stimulate the economy. Moreover, compared with other central banks, the Bank of Japan now looks like the least likely candidate to exit its accommodative monetary policy, which could reinstate the yen’s position as a main funding currency for carry trades.
7. GBP- Bank of England Interest Rate Announcement, Thurs., Apr. 7, 7:00 am, ET.
The market has been pricing a Bank of England rate hike for a while now and the GBP could continue to attract some bids ahead of the April 7 meeting. However, if the Bank of England decides to sit on the sidelines for another month, the GBP could come under pressure, especially if the hawkish rhetoric from Fed officials increases.
8. EUR- European Central Bank Interest Rate Announcement, Thurs., Apr. 7, 7:45 am, ET.
Although the European Central Bank could raise rates by 25 bps on April 7, the market may have already fully priced it into the EUR exchange rate. The single currency could stay supported ahead of the ECB meeting but if the central bank does not open the door to further rate hikes, the EUR could see some profit taking following the announcement as the market’s attention shifts to Portugal’s debt obligations coming due on April 15.
9. USD- U.S. Jobless Claims, an important gauge of employment trends and labor market conditions, Thurs., Apr. 7, 8:30 am, ET.
The trend of improvement in the weekly jobless claims could continue with first-time applications for unemployment benefits forecast to reach 382K from 388K in the previous week. To indicate a significant decline in unemployment, economists estimate that jobless applications would need to fall to 375K or below.
10. CAD- Canada Employment Situation and Unemployment Rate, the main gauge of employment trends and labor market conditions, Fri., Apr. 8, 7:00 am, ET.
Following the lesser-than-expected 15,100 jobs created in February, the Canadian economy could add up to 29,000 K new jobs in March, while the unemployment rate inches lower to 7.7% from 7.8% in the previous month.
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