After ending the first quarter of this year on a strong note, the US dollar continued to remain bullish in the first week of April and into the second quarter of this year. The greenback gained ground against all major currencies except the Australian dollar and the British Pound. The EUR/USD pair barely moved during the week and the biggest loser was the New Zealand dollar. The greenback’s gains against the Japanese yen largely mirrored the increase in the yield of the US Treasury 10-year bonds and the gains in the equity markets. The Nonfarm Payrolls report for March also buoyed the greenback.
In the upcoming week, the key releases include the CPI data from the U.S., GDP data from the U.K., and the interest rate announcement by the ECB. Here is an outlook on some of the important releases from around the world:
#1: U.K. GDP (04/10/2019 Wednesday 08:30 GMT)
The British economy rebounded in the month of January in spite of Brexit uncertainty and posted the largest monthly growth ever since December 2016 after ending 2018 on a weak note. The fightback was led by the manufacturing sector and retail trade which staged a recovery after remaining weak towards the close of last year.
GDP grew 0.5 percent in January, reversing the 0.4 percent decline in December last year. Analysts had expected the growth rate to come in at 0.2 percent. Forecast for February 2019: an increase of 0.2 percent is on the cards
#2: U.K. Manufacturing Production (04/10/2019 Wednesday 08:30 GMT)
On a month-on-month basis, the manufacturing output in the U.K. rose by 0.8 percent in January, following the 0.7 percent decline in December. Forecast for February 2019: Manufacturing production is expected to increase by 0.20percent
#3: Euro Zone ECB Main Refinancing Rate (04/10/2019 Wednesday 11:45 GMT)
In the meeting held in March, the European Central Bank decided to hold its key refinancing rate at the same 0.0 percent level and also extended the timing the first interest rate hike in about eight years. The interest rate hike can now be expected to happen only in 2020. Further, the central bank announced the launch of a new series of quarterly TLTRO in September 2019. This is aimed at preserving favorable bank lending situations and enabling the smooth implementation of the monetary policy. The policymakers also reaffirmed that the cash from maturing bonds will be reinvested for a longer time. Forecast for April 2019: 0.0 percent
#4: Euro Zone ECB Monetary Policy Statement (04/10/2019 Wednesday 11:45 GMT)
The European Central Bank often changes the Monetary Policy Statement a little at each release. Traders focus on these changes. The ECB uses the statement as a tool to communicate with investors as regards the monetary policy. It provides the outcome of the members’ decision on setting interest rates and a commentary on the economic conditions that impacted their decision. More importantly, it provides an economic outlook and clues on future outcomes.
#5: Euro Zone ECB Press Conference (04/10/2019 Wednesday 12:30 GMT)
The ECB President and Vice President hold a press conference about 45 minutes after the announcement of the Minimum Bid Rate. The press conference lasts for about an hour and has two parts. While the first part involves the reading of a prepared statement, the second part involves answering questions by the press. As press questions can lead to unscripted answers, heavy market volatility can be expected.
#6: U.S. CPI and Core CPI (04/10/2019 Wednesday 12:30 GMT)
In the U.S., consumer prices rose 0.2 percent on a month-over-month basis in February after the flat reading reported in January. The reading for February matched analysts’ expectations. This was the first monthly increase in the CPI. The rise was attributed to the increase in prices of rents, food, and gasoline. The food index recorded largest monthly increase of 0.4 percent ever since May 2014, while the gasoline index jumped 1.5 percent and the energy index rose 0.4 percent in spite of the declines in the natural gas and electricity indexes.
The core CPI rose by 0.1 percent in the month of February after registering an increase of 0.2 percent in the previous month. The reading for February matched with analysts’ expectations. The indexes for shelter, personal care, education, and apparel increased. On the other hand, the indexes for recreation, used trucks and cars, medical care, and new vehicles declined.
CPI and Core CPI forecast for March 2019: 0.3 percent and 0.2 percent increase, respectively
#7: U.S. FOMC Meeting Minutes (04/10/2019 Wednesday 18:00 GMT)
The U.S. FOMC releases the minutes of the meeting eight times in a year three weeks after the announcement of the Federal Funds Rate. It provides a detailed account of the most recent meeting of the FOMC and offers deep insights into the financial and economic conditions that impacted their decision with respect to setting interest rates.
#8: U.S. PPI (04/11/2019 Thursday 12:30 GMT)
In the U.S., the prices of final demand goods rose by 0.1 percent on a month-over-month basis in February, recovering from the 0.1 percent decline in the prior month. The reading for February came in below analysts’ expectations for an increase of 0.2 percent. Costs rebounded for energy and prices decline at a slower pace for food. The costs of services remained steady, following the increase in January. The core PPI, which excludes energy and food prices, rose 0.1 percent, following the 0.3 percent increase in the previous month. However, the reading for the month missed analysts’ expectations for a 0.2 percent increase. Forecast for March 2019: PPI and Core PPI are expected to increase by 0.3 and 0.3 percent respectively