The impact of the U.S. employment report on the currency market was not very significant though 313,000 jobs were added in February, the highest addition in one-month in as many as three-and-a-half years, it reinforced the positive momentum seen in the economy. Though the unemployment rate rose and the growth in average hourly earnings slowed down, the strong readings might prompt the Federal Reserve to hike the rates later in the month. The USD/JPY pair registered some gains towards the close of the week and is well poised extend gains.
Actually, the developments in the currency market over the last week were impacted neither by the interest rate decisions nor the economic data releases. The price movement in the forex market was driven by the ease of concerns related to trade wars and North Korea military action as the U.S. softened its tone. The euro consolidated its position because of an improvement in investors’ risk appetite though they were not very happy with ECB’s economic projections. Sterling remained vulnerable to the downside movement as Brexit negotiations do not seem to be progressing well. The Canadian dollar continued to show some strength throughout the week. The Australian dollar gained as the U.S. stocks rose.
In the U.S., the February’s consumer spending and inflation data are scheduled for release in the upcoming week. Here is an outlook on the key releases from around the world:
#1: U.K. Annual Budget Release (03/13/2018 Tuesday 11:30 GMT)
Released annually, the annual budget outlines the U.K. government’s income and expenditure projections for the year. It also includes information on financial objectives, borrowing levels, and planned investments. Traders care because domestic government borrowing and spending levels can significantly impact the economic performance of the country. While increased spending results in the creation of work for contractors and generation of jobs, the borrowing levels have an impact on the nation’s credit rating and indicate the status of the underlying fiscal position.
HM Treasury had indicated in the Annual Budget released on March 8, 2017, that growth was good through 2016 and that as many as 31.8 million people were employed. This is a record high figure as far as employment was concerned. Further, the Office for Budget Responsibility had forecasted that the economy would grow by 2.0 percent in 2017. The Office had also predicted that the growth would slow down a little bit in 2018, before picking up in 2021 to the 2.0 percent level.
#2: U.S. CPI and Core CPI (03/13/2018 Tuesday 12:30 GMT)
In the U.S., consumer prices rose by 0.5 percent on a month-over-month basis in January after the CPI reading for the prior month increased by 0.2 percent. The reading for January came in above analysts’ expectation of 0.3 percent increase. The broad-based increase in consumer prices was driven by the prices of gasoline, apparel, medical care, shelter, and food. The core CPI, excluding energy and food prices, roses by 0.3 percent. For the month of February, the consumer prices (both the CPI and the core CPI) are expected to increase by 0.2 percent.
#3: Bank of Canada Governor Stephen Poloz Speaks (03/13/2018 Tuesday 14:15 GMT)
Stephen Poloz, Governor of the Bank of Canada, is scheduled to speak on the topic “Today’s Labour Market and the Future of Work” in Ontario at Queen’s University. The text of his speech will be released at the specified time. However, the speech will be delivered 15 minutes after the release of the text. Volatility can be expected during his speeches as traders make an attempt to understand the direction of interest rate in the future.
#4: China Industrial Production (03/14/2018 Wednesday 02:00 GMT)
In China, industrial production increased 6.2 percent on a year-on-year basis in December last year after the 6.1 percent rise in the previous month. The reading for January beat analysts’ expectation for a 6.0 percent gain. Output increased at a faster rate in the textiles, chemicals, and transport and power equipment sectors. However, increase in output declined in the non-metal minerals, general equipment, machinery, and communication sectors. Ferrous metals production reduced for the fourth straight month. On a month-on-month basis, industrial production rose by 0.52 percent. For the whole of 2017, the increase in industrial production was 6.6 percent compared to the 6.0 percent growth in the prior year. Forecast for January: 6.3 percent increase
#5: European Central Bank President Mario Draghi Speaks (03/14/2018 Wednesday 08:00 GMT)
Mario Draghi, President of the European Central Bank, is scheduled to speak in Frankfurt at an ECB conference that is hosted by the Institute for Monetary and Financial Stability. Often, markets remain volatile during his speeches. This is because traders make an attempt to understand the direction of interest rate in the future.
#6: U.S. Retail Sales and Core Retail Sales (03/14/2018 Wednesday 12:30 GMT)
In the U.S., retail sales unexpectedly dropped by 0.3 percent on a month-over-month basis in January after it failed to record any growth in December last year. The reading for January came in below analysts’ expectation for a 0.2 percent increase. Retail sales recorded the largest decline ever since February last year mainly because of a decline in sales of automobiles. If the sales of automobiles, gasoline, food services, and building materials are excluded, retail trade remained unchanged in January after the reading for the prior month was revised downward to a 0.2 percent drop. Forecast for retail sales and core retail sales in February: 0.3 percent gain for both
#7: U.S. PPI (03/14/2018 Wednesday 12:30 GMT)
In the U.S., the producer prices of final demand goods rose by 0.4 percent on a month-over-month in January after no change was reported in the in the month of December last year. The reading for January matched with analysts’ expectations. The increase in producer prices was attributed to the strong rise in gasoline and healthcare costs. The producer prices of final demand goods, excluding foods, trade, and energy services rose by 0.4 percent in the month of January, the largest increase ever since the 0.5 percent gain in April 2017. Forecast for February: 0.1 percent increase
#8: U.S. Crude Oil Inventories (03/14/2018 Wednesday 14:30 GMT)
In the U.S., crude oil stocks rose by 2.408 million barrels during the week that ended on March 2, after recording a 3.019 million barrel increase in the prior period. The reading for the week came in below analysts’ expectation for an increase of 2.723 million barrels in crude oil inventories. On the other hand, gasoline stocks fell by 0.788 million barrels. Gasoline stocks declined for the first time in about a month. In the previous period, gasoline stocks had increased by 2.483 million barrels. Analysts had expected gasoline stocks to drop by 1.201 million barrels.
#9: New Zealand GDP (03/14/2018 Wednesday 21:45 GMT)
New Zealand’s GDP grew 0.6 percent on a quarter-on-quarter basis in the third quarter of last year after the reading for the prior period was revised upward to 1.0 percent growth. The reading for the September quarter of last year came in slightly above analysts’ expectation for a 0.5 percent growth. Growth slowed down mainly because of a contraction in the utility sector after recording no growth in the previous quarter. In the meantime, the services sector expanded at a slower pace of 0.6 percent following the 1.0 percent expansion in the prior period. The construction sector rebounded sharply. Forecast for the last quarter of 2017: 0.8 percent growth
#10: Swiss National Bank Libor Rate (03/15/2018 Thursday 08:30 GMT)
The Swiss National Bank decided to leave the interest rate for deposits at the record low level of -0.75 percent during the meeting held in December last year as was widely expected. Policymakers said that the franc continued to be valued higher even though the overvaluation had started to decrease. Further, they increased the 2017 and 2018 inflation forecasts because of higher oil prices and weakening of the franc. Forecast for March 2018: -0.75 percent
#11: Swiss National Bank Monetary Policy Assessment (03/15/2018 Thursday 08:30 GMT)
The Swiss National Bank uses the monetary policy assessment as a tool for communicating with investors as regards the monetary policy. It consists of the outcome of the most recent interest rate decision meeting and a commentary on the economic conditions that contributed to making the decision. More importantly, it provides a projection of the country’s economic condition and clues on future interest rate decisions.
#12: U.S. Building Permits (03/16/2018 Friday 12:30 GMT)
In the U.S., the number of building permits issued rose by 5.9 percent to a seasonally adjusted annual rate of 1,377,000 in January from the prior month, according to revised figures. The preliminary estimate had shown that building permits issued in the U.S. rose at a faster rate of 7.4 percent to the 1,396,000 level. Forecast for February: 1,330,000