Forex Market Outlook For The Week March 11 – 15, 2019

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Last week, the U.S. dollar marched ahead, rising on both bad and good news alike. Actually, the greenback benefitted from safe-haven flows following a dive in spending in the construction sector and upbeat ISM Non-Manufacturing PMI which beat analysts’ estimates. The Nonfarm Payrolls data disappointed, but growth in wages continued to accelerate. Trade talks are being continued with China but a definite deal has not emerged so far.

Meanwhile, Brexit negotiations continued to progress in Brussels, but no appreciable success has been reported so far. While the U.K. is pushing for incorporation of legally-binding changes into the deal, the European Union is not ready to go beyond simple clarifications.

In Canada, the Central Bank’s dovish shift sent the loonie lower. The Australian dollar also suffered because of weak GDP data and the fresh growth targets set by China at 6 to 6.5 percent. The EUR/USD pair lost ground because of the USD’s strength.

In the upcoming week, four major US data stand out. However, Brexit vote in the UK may steal the show. Having said that here is an outlook on some of the key releases from around the world:

#1: U.S. Fed Chair Jerome Powell Speaks (03/10/2019 Sunday 23:00 GMT)

forex market outlookJerome Powell, Fed Chair, is scheduled to discuss the economic outlook, interest rates, and financial stability at an interview organized by CBS’s 60 Minutes. Markets often turn volatile during his speeches as traders make an attempt to understand the direction of interest rates in the future.

#2: U.S. Retail Sale and Core Retail Sales (03/11/2019 Monday 12:30 GMT)

In the U.S., retail trade plunged by 1.2 percent in the month of December last year after the reading for the prior month was revised to represent an increase of 0.1 percent. The reading for the month also missed analysts’ expectations for a 0.2 percent increase by a huge margin. This is the steepest drop in retail sales ever since September 2009. Sales dropped in most of the categories. Core retail sales fell 1.8 percent in the month of December last year, following the 1.0 percent increase in the previous month. Forecast for January 2019: It is expected that core retail sales will increase by 0.4 percent and retail sales will remain flat

#3: U.S. Fed Chair Jerome Powell Speaks (03/11/2019 Monday 13:00 GMT)

Jerome Powell, Fed Chair, is scheduled to deliver the opening remarks at the Just Economy Conference of the National Community Reinvestment Coalition in Washington DC. Markets often turn volatile during his speeches as traders make an attempt to understand the direction of interest rates in the future.

#4: U.K. GDP (03/12/2019 Tuesday 09:30 GMT)

In the U.K., GDP contracted in December last year because of a broad-based slump in output to close the weakest year ever since 2012. According to the Office for National Statistics, the economy contracted 0.4 percent from the prior month, driven by a decline in spending during the festive shopping period. The figures showed that the service, production, and construction sectors shrank in December. In November 2018, the British economy had expanded 0.2 percent.

#5: U.K. Manufacturing Production (03/12/2019 Tuesday 09:30 GMT)

In the U.K., industrial activity declined in December last year. Manufacturing production dropped by -0.7 percent on a month-on-month basis against analysts’ expectations for an increase of 0.2 percent. In the month of November last year, manufacturing production had declined 0.1 percent.

#6: U.S. CPI and Core CPI (03/12/2019 Tuesday 12:30 GMT)

In the U.S., the consumer prices remained flat on a month-over-month basis for the third month in a row in January against analysts’ expectations for a 0.1 percent increase. The energy index fell for the third month in a row, offsetting the rise in indexes for all items except energy and food and for food. The major indexes for energy components declined in January. The core CPI rose by 0.2 percent in January and was in line with analysts’ expectations. The indexes for apparel, shelter, medical care, household furnishings, recreation, and operations rose, while those for airline fares and motor vehicle insurance edged down.

#7: U.K. Parliament Brexit Vote (03/12/2019 Tuesday)

The British government is all set to put up the amended Brexit deal for a vote and it most likely will fail once again. The vote on a no-deal Brexit is set to take place on the next day. This is also expected to be rejected by the parliament. The final vote is scheduled for March 15. The Parliament is expected to direct the U.K. government to try for a three-month extension. The anticipated Brexit delay drove the pound higher, but then the currency retreated because of uncertainty. Theresa May might announce that she doesn’t have anything new to offer. Further, the House of Commons could surprise with a vote favoring a Brexit without a deal. Such a move would be devastating for the pound.

#8: U.K. Annual Budget Release (03/13/2019 Wednesday)

This document, released annually, outlines the government’s this year’s budget. This includes expected income and spending levels, financial objectives, borrowing levels, and planned investments. Traders care because domestic government borrowing and spending levels can significantly impact the economy. While increased spending helps generate more jobs and work for contractors, borrowing impacts the nation’s credit rating and provide more insight into the underlying fiscal position.

#9: U.S. Core Durable Goods Orders (03/13/2019 Wednesday 12:30 GMT)

In the U.S., new orders for long-lasting goods manufactured in the country, excluding transportation, rose by 0.1 percent in December last year, following the 0.2 percent decline in the previous month. The reading for the month missed analysts’ expectations for a 0.3 percent increase.

#10: U.S. PPI (03/13/2019 Wednesday 12:30 GMT)

In the U.S., producer prices of final demand goods declined 0.1 percent in January, the same pace as in the prior month. Analysts had expected a 0.1 percent increase. The goods prices dropped 0.8 percent, the largest decline ever since September 2015 because of lower energy and food costs. On the other hand, the cost of services increased 0.3 percent after remaining unchanged in the prior month. The core PPI, which excludes energy and food, rose by 0.3 percent, rebounding from the 0.1 percent decline in the prior month.

#11: Japan Monetary Policy Statement (03/15/2019 Friday 03:00 GMT)

The Monetary Policy Statement is a tool that the Bank of Japan uses for communicating with investors as regards the monetary policy. It provides the outcome of the members’ decision on the purchase of assets and a commentary on the economic conditions that impacted their decision. More importantly, it provides a projection of the economic outlook and clues on future interest rate decisions.

#12: Japan Press Conference (03/15/2019 Friday)

Governor of the Bank of Japan holds a press conference after the announcement of the interest rate. The central bank uses it as a tool to communicate with investors as regards the monetary policy. In addition to covering the factors that impacted the most recent rate decision, it provides an economic outlook, inflation, and clues as regards future monetary policy.

#13: Japan BoJ Governor Kuroda Speaks (03/15/2019 Friday 08:55 GMT)

Haruhiko Kuroda, Governor of Bank of Japan, is scheduled to speak at the B20 Tokyo Summit. Markets often turn volatile during his speeches as traders make an attempt to understand the direction of interest rates in the future.

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