Weekly market Analysis
This Week's Risk Events
As expected, the Bank of Japan and the ECB left their monetary policy unchanged last week.
The focus of the new week will be the decision of the Fed on the interest rate (published on Wednesday at 18:00 GMT), the publication on Friday (12:30 GMT) of data from the US labor market in April.
As always, the publication of a number of important macroeconomic data is expected on the beginning of the trading week and several important news are published.
Tuesday 02 May
01:45 (GMT) CNY Caixin Manufacturing PMI
The activity index of purchasing managers Caixin (PMI) is a leading indicator of the state of China’s manufacturing sector. China’s economy is the second largest in the world, so the publication of important macroeconomic indicators from China can have a strong impact on the entire financial market. Forecast: 51.2 in March (against 51.7 in February). Although the value above 50 indicates growth, nevertheless, the relative decrease in the value of the indicator may negatively affect the quotations of the yuan, and positively – on the dollar’s quotes.
04:30 AUD Cash Rate / RBA Rate Statement
Forecast: the rate will remain at the same level of 1.5%. If, in the subsequent accompanying statement, the RBA shows tough rhetoric about the economic forecast and the probability of an early rate hike, this will be a bullish signal for the AUD.
08:30 GBP Manufacturing PMI
The Purchasing Managers’ Index (PMI) in the manufacturing sector is an indicator of the state and sentiment in the business environment in the manufacturing sector in the UK. Forecast: 54.0 in April (against 54.2 in March). Although the indicator above the value of 50 is a positive factor for GBP, the relative decrease in the index may negatively affect the quotes of the pound. The growth of the indicator is bullish factor for GBP.
Tentative NZD GDT Price Index
The price index for dairy products from Global Dairy Trade reflects the change in world prices for dairy products in percentage terms. The main export item of New Zealand is dried milk. The next increase in world prices will support the New Zealand dollar. Previous value: + 3.1%. If the index comes down, the New Zealand currency will react with a decrease.
22:45 NZD Employment Change q / q / Unemployment Rate
Change in the employment rate in New Zealand in the first quarter. The high value of the indicator is a positive factor for NZD. Forecast: 0.8%.
The unemployment rate is an indicator that measures the ratio of the proportion of the unemployed population to the total number of able-bodied citizens. The increase in the indicator weakens the economy. A decrease in the indicator value is a positive factor for NZD. Forecast: 5.2% in the first quarter (previous value 5.2%), which indicates stabilization in the labor market, but also about the lack of progress in reducing unemployment. These values can generally be assessed as weak, which will negatively affect the New Zealand dollar.
Wednesday 03 May
08:30 GBP Construction PMI
The PMI business activity index in the construction sector assesses the business climate and conjuncture in the construction sector of the UK. Forecast: 52.0 in April (against 52.2 in March). Although the indicator above the value of 50 is a positive factor for GBP, the relative decrease in the index may negatively affect the quotes of the pound. The growth of the indicator is bullish factor for GBP.
12:15 USD ADP Non-Farm Employment Change
Change in the number of employed in the US (report on employment from ADP) in April. Usually, it has a strong impact on the market and quotes the dollar. Strong data positively affects the dollar. A decrease of 85,000 employees in the private sector of the United States is expected (178,000 versus 263,000 in March). Reducing the result weakens the US dollar.
14:00 USD ISM Non-Manufacturing PMI
The index of business activity (ISM) is an indicator of the state of the service sector in the US economy. The result above 50 is considered as positive and strengthens the USD. Forecast: 55.8 in April (against 55.2 in March)
14:30 USD Crude Oil Inventories
Energy Information Administration the US Department of Energy publishes a weekly report on oil and petroleum products in US stores. Decrease in reserves, as a rule, has a favorable effect on oil prices. The publication of data usually is accompanied by a surge in volatility in oil prices and oil futures, as well as in the quotes of the Canadian dollar. The previous value of the indicator was -3.6 million barrels of oil and oil products.
18:00 USD Federal Funds Rate
The Federal Reserve’s decision on the interest rate in the US, the Fed’s comment on monetary policy. Forecast: the rate will remain at the same level of 1.0%. A surge in volatility is expected throughout the financial market.
Thursday 04 May
01:30 AUD Trade Balance
This indicator estimates the ratio between the volume of exports and imports of Australia for March. The growth of exports from Australia leads to an increase in the trade surplus, which has a positive impact on the AUD. Forecast: 3.33 billion Australian dollars (the previous value of 3.57 billion Australian dollars). A decrease in the trade surplus may have a negative effect on the Australian dollar.
03:10 AUD RBA Gov Lowe Speaks
In the course of his speech, Philip Lowey will assess the current situation in the Australian economy and point to further plans for the monetary policy of the agency entrusted to him. Any signals from him regarding the change in the RBA monetary policy plans will cause a sharp increase in volatility in the auctions of the AUD and on the Australian stock market.
08:30 GBP Services PMI
The index of business activity in the service sector PMI is an indicator of the economic situation in the service sector of the UK. The high value of the indicator will positively affect GBP, while a low value will trigger a fall in the currency. Forecast: 54.6 in April (against 55.0 in March).
12:30 CAD Trade Balance
Export indicators (primarily oil, gold, industrial products) are an important indicator of the growth rate of the Canadian economy. Steady growth in exports from Canada leads to an increase in the trade surplus, which has a positive effect on the CAD rate.
Forecast: the surplus in March will be 0.3 billion Canadian dollars (against a deficit of -1.0 billion Canadian dollars), which should positively affect the Canadian dollar.
12:30 USD Unemployment Claims
The weekly report of the US Department of Labor, which contains data on the number of initial applications for unemployment benefits. The result above the expected indicates a weak labor market, which has a negative impact on the US dollar. The forecast is expected to decline to 246,000 versus 257,000 for the previous period, which should positively affect the dollar.
16:30 EUR ECB President Draghi Speaks
During the speech of the head of the ECB Mario Draghi, the volatility of trade not only on the euro and the European stock indices, but also throughout the financial market, especially if it touches the subject of the monetary policy of the ECB, increases.
The soft tone of Mario Draghi’s speech and the propensity to continue the extra soft monetary policy of the ECB will have a negative impact on the euro and positively on European indices.
20:25 CAD BOC Gov Poloz Speaks
The Bank of Canada is pursuing an extra soft monetary policy. The interest rate in Canada is at the level of 0.5%. If Stephen Poloz touches on the monetary policy of the Bank of Canada, then the volatility in the Canadian dollar will rise sharply. The harsh tone of his speech will help strengthen the Canadian dollar. The soft rhetoric of Stephen Poloz’s speech and the propensity to pursue a soft monetary policy will have a negative impact on CAD quotes.
Friday 05 May
01:30 AUD RBA Monetary Policy Statement
RBA Commentary on Monetary Policy. Rigid rhetoric about further plans for monetary policy is a bullish factor for the AUD.
03:00 NZD Inflation Expectations q / q
Expectations for inflation in New Zealand. The indicator reflects consumer expectations regarding future inflation for the next quarter. The higher the expectations, the more significant effect they will make on the probability of an increase in the rate. The high value of the indicator is a positive factor for NZD. Previous value: 1.9%.
12:30 CAD Employment Change / Unemployment Rate
Change in the number of employed in Canada / Unemployment rate in Canada in April. Forecast: 10,000 (against 19,400 in March) / 6.7% (against 6.7% in March). It is likely that CAD will respond to a decline in this publication values.
12:30 USD Average Hourly Earnings m / m / Non-Farm Employment Change / Unemployment Rate
The most important indicators of the labor market in the US in April. Forecast: 0.3% (against 0.2% in March) / 194 000 (against 98 000 in March) / 4.6% (against 4.5: in March).
In general, the indicators can be called strong if they coincide with the forecast or come out better, which will have a positive effect on the USD. However, it is often difficult to predict the market reaction to the publication of indicators. In any case, when these indicators are published, a surge in volatility is expected in the trades not only in USD, but throughout the financial market.
17:30 USD Fed Chair Yellen Speaks
If Janet Yellen touches on the topic of monetary policy in the US, volatility in dollar trading will increase dramatically. If Janet Yellen’s speech contains hints of an increase in the interest rate in the US, the US dollar will become sharply stronger on the foreign exchange market.