Last week, EUR/USD pair hit the lowest level of 1.2155 as analysts expected. However, the U.S. dollar started losing its hard-won position on the back of statements made by Jerome Powell, the new Fed Chair and Donald Trump, the U.S. President. Trump expressed intention to levy import duties on aluminum and steel which triggered some discussion about a new trade war, especially following the prompt and sharp reaction by the European Commission Head. As a result of all these, the EUR/USD pair gained 170 points to finish the week at 1.2320.
The GBP/USD pair dropped to 1.3710 but rebounded to the 1.3797 level by the end of the week. The USD/JPY reached the 107.67 level fairly quickly early last week but lost steam and tested the 105.54 level and closed the week 20 points above the lowest mark.
The upcoming week starts with the results of Italy’s parliamentary elections. This event could have a significant impact on the euro. Further, a slew of announcements from countries around the world, including interest rate decisions from Australia, Japan, Euro Zone, and Canada is scheduled for the coming week. Here is an outlook on some of the major releases:
#1: Italy Parliament Election (03/04/2018 Sunday)
Voters in Italy will elect the 630 Chamber of Deputies members and 315 Senate members in a general election. The government will be formed after the election. Elections are held every 5 years. Snap elections are also possible. The winners are often projected prior to the announcement of the official vote count, based on exit polling and early vote count.
#2: U.K. Services PMI (03/05/2018 Monday 09:30 GMT)
In the U.K., the IHS Markit/CIPS Services PMI declined to 53 points in the month of January from 54.2 in December last year. The reading for January missed analysts’ expectation 54.3 points and represented the weakest rate of expansion in the sector ever since September 2016 amid the loss of clients and concerns related to the Brexit negotiations. However, the business optimism remained the strongest ever since March 20017 and the job creation rate accelerated to the highest level in four months. The price inflation rate slowed down to a four-month low but continued to remain high. Input prices, on the other hand, increased at the slowest rate since September 2016. Forecast for February: 53.3
#3: U.S. ISM Non-Manufacturing PMI (03/05/2018 Monday 15:00 GMT)
In the U.S., the ISM Non-Manufacturing PMI rose to 59.9 points in January after the reading for December was revised upward to 56 points. The reading for January beat analysts’ expectation of 56.5 points and represented the strongest growth in the sector ever since August 2005 as production increased, and new orders and employment grew. Forecast for February: 58.9
#4: Australia Current Account (03/06/2018 Tuesday 00:30 GMT)
Australia’s current account deficit in the third quarter of last year was A$9.125 billion, down by A$0.539 billion from the figure for the previous quarter. However, the deficit was lower than analysts’ expectation of A$9.200 billion. Forecast for the last quarter of 2017: a deficit of A$12.3 billion
#5: Australia Retail Sales (03/06/2018 Tuesday 00:30 GMT)
In Australia, retail trade declined 0.5 percent on a month-on-month basis in December last year after the figure for the previous month was revised upward to an increase of 1.3 percent. Analysts had expected the retail trade to decline by 0.2 percent. Retail trade declined for the first time since August 2017 because of lower sales at household goods and clothing stores and footwear and personal accessories outlets. Forecast for January: 0.4 percent gain
#6: Australia Interest Rate (03/06/2018 Tuesday 03:30 GMT)
In the meeting held in the month of February, the Reserve Bank of Australia decided to hold the cash rate at the record low level of 1.5 percent as was widely expected by the market. According to the policymakers, the Australian economy would grow at a pace that is slightly above the 3 percent mark over the next few years because of positive business conditions and improvement in the non-mining investment outlook. However, they expect the inflation to remain low for some more time. Forecast for March: 1.5 percent
#7: Reserve Bank of Australia Rate Statement (03/06/2018 Tuesday 03:30 GMT)
The Reserve Bank of Australia releases the rate statement on the first Tuesday of every month except January. It is one of the primary tools of the central bank to communicate with the investors as regards the monetary policy. In addition to providing information as to how the policymakers arrived at the decision, it discusses the country’s economic outlook and provides clues on future interest rate decisions.
#8: Reserve Bank of Australia Governor Philip Lowe Speaks (03/06/2018 Tuesday 21:35 GMT)
Philip Lowe, Governor of the Reserve Bank of Australia, is scheduled to speak on “The Changing Nature of Investment” in Sydney at the Australian Finance Review Business Summit. Markets often remain volatile during his speeches because traders make an attempt to understand the direction of interest in the future.
#9: Australia GDP (03/07/2018 Wednesday 00:30 GMT)
Australia’s economy expanded 0.6 percent on a quarter-on-quarter basis in the third quarter of last year after the figure for the previous quarter was revised upward to an expansion of 0.9 percent. The reading for the September quarter of last year came in slightly below analysts’ expectation for a growth rate of 0.7 percent. The growth was driven by positive contributions from inventory changes and non-dwelling construction sector. However, domestic demand and foreign trade remained weak. Forecast for the last quarter of 2017: 0.5 percent expansion
#10: U.S. ADP Non-Farm Employment Change (03/07/2018 Wednesday 13:15 GMT)
In the U.S., the private businesses hired 234,000 workers in the month of January after the figure for the prior month was revised downward to an addition of 242,000 jobs. The reading for January, however, beat analysts’ expectation of 186,000 job additions. The services, transportation and utilities, education and health, professional and business, leisure and hospitality, and financial sectors all hired workers. Forecast for February: addition of 194,000 jobs
#11: Canada Trade Balance (03/07/2018 Wednesday 13:30 GMT)
Canada’s trade deficit came in at C$3.2 billion in the month of December 2017, widening from the deficit of C$ 2.7 billion reported for November last year. Analysts had expected the deficit to come in at C$2.2 billion. While imports rose by 1.5 percent, exports increased 0.6 percent. Energy products contributed to the increase in both exports and imports.
#12: Bank of Canada Rate Statement (03/07/2018 Wednesday 15:00 GMT)
The Bank of Canada releases the rate statement eight times in a year. The central bank uses this statement as a tool to communicate with the investors as regards monetary policy. In addition to providing information on the outcome of the interest rate decision and commentary on the economic conditions that influenced the decision, it offers an economic outlook and clues on future decisions.
#13: Canada Interest Rate (03/07/2018 Wednesday 15:00 GMT)
In January, the Bank of Canada raised its interest rate by 25 basis points to 1.25 percent as analysts expected. Policymakers attributed to the strong data in the recent times. In addition, they said that the inflation is near the target and that the economy is strong. However, they noted that the uncertainty related to NAFTA’s outlook is clouding the country’s economic outlook. The corresponding bank rate and deposit rates are 1.5 percent and 1.0 percent, respectively.
#14: U.S. Crude Oil Inventories (03/07/2018 Wednesday 15:30 GMT)
In the U.S., the crude oil stocks increased by 3.019 million barrels during the week that ended on February 23 after the stocks declined by 1.616 million barrels in the prior period. Analysts had expected an increase of 2.4 million barrels. Gasoline stocks also rose by 2.483 million barrels, following an increase of 0.261 million barrels in the prior week. The reading beat market expectation for a decline of 0.190 million barrels.
#15: Australia Trade Balance (03/08/2018 Thursday 00:30 GMT)
Australia’s trade deficit was A$1.36 billion in December last year compared to a trade surplus of A$4.41 billion a year ago. The reading for December missed analysts’ expectation for a surplus of A$0.2 billion. This is the largest trade gap ever since August 2016 because of a spurt in imports. Forecast for January: trade surplus of A$0.22 billion
#16: European Central Bank Minimum Bid Rate (03/08/2018 Thursday 12:45 GMT)
The European Central Bank decided to hold its benchmark interest rate at the 0 percent level itself in the meeting in January as was expected by the market. The central bank also confirmed that the net monthly asset purchases would run at the monthly pace of €30 billion till September end, or beyond, if required. Policymakers expressed concerns about weak inflation and a surge in the price of euro. Forecast for February: 0.0 percent
#17: European Central Bank Press Conference (03/08/2018 Thursday 13:30 GMT)
The European Central Bank holds a press conference with the President and the Vice President as the speakers 45 minutes after the announcement of the Minimum Bid Rate. The press conference lasts for about an hour. It has two parts. The first part is reading of a prepared statement and the second part is open press questions. As questions can call for unscripted answers, heavy market volatility can be expected. Traders care because policymakers may provide clues on future decisions.
#18: Japan Interest Rate (03/09/2018 Friday 03:00 GMT)
Japan’s central bank decided to leave the key short-term interest rate at the -0.1 percent level itself during the meeting in January as was widely expected. Policymakers also maintained the 10-year yield target of the government bond at around zero percent. Further, they provided an upbeat view as regards inflation expectations. Forecast for February: -0.10 percent
#18: Bank of Japan Monetary Policy Statement (03/09/2018 Friday 03:00 GMT)
The Bank of Japan releases the monetary policy statement eight times in a year. The central bank uses it as a tool to update investors about the monetary policy. The statement provides the outcome of the members’ decision on asset purchases and commentary on the economic conditions that impacted their decision. More importantly, it provides a projection of the country’s economic outlook and clues on future interest rate decisions.
#19: Bank of Japan Press Conference (03/09/2018 Friday)
The Governor of the Ban of Japan attends a press conference after the announcement of the monetary policy. The central bank uses it a method to communicate with investors as regards the monetary policy. In addition to providing information on the factors that impacted the most recent monetary policy decision, the bank makes a projection of the inflation, overall economic outlook, and gives clues on future decisions.
#20: U.K. Manufacturing Production (03/09/2018 Friday 09:30 GMT)
In the U.K., the manufacturing production increased 1.4 percent on a year-on-year basis in December last year, easing from the upwardly revised increase of 3.8 percent in the prior month. The reading for the month beat analysts’ expectation of 1.2 percent gain. Even then, this is the lowest increase in factory output in as many as eight months. On a month-on-month basis, factory output rose by 0.3 percent from the 0.2 percent increase recorded in November last year. This was in line with analysts’ expectation. With this, the manufacturing production has increased for eight consecutive months driven by metal products and basic metals. For the full year 2017, manufacturing production rose by 2.8 percent after the 0.9 percent increase in 2016. Forecast for January on a month-on-month basis: 0.2 percent increase
#21: Canada Employment Change (03/09/2018 Friday 13:30 GMT)
In Canada, employment fell by 88,000 in January, missing analysts’ expectation for an increase of 10,000, from December last year. Employment decreased for the first time since November 2016. Further, this is the biggest drop since January 2009 because of a sharp decline in part-time work which offset the gains in full-time employment.
#22: Canada Unemployment Rate (03/09/2018 Friday 13:30 GMT)
Canada’s unemployment rate rose to 5.9 percent in January after the reading for the previous month was revised upward to 5.8 percent. Analysts had expected the unemployment rate to come in at 5.8 percent.
#23: U.S. Average Hourly Earnings (03/09/2018 Friday 13:30 GMT)
In the U.S., the average hourly earnings of all employees on the private nonfarm payrolls increased by 0.3 percent or 9 cents to US$26.74 in January after the figure for December was revised upward to an increase of 0.4 percent. The reading for the month matched with analysts’ estimates. On a yearly basis, the average hourly earnings of employees rose by 2.9 percent or 75 cents, the largest increase ever since June 2009 after the previous period’s figure was revised upward to 2.7 percent increase. Forecast for February: 0.3 percent gain
#24: U.S. Non-Farm Employment Change (03/09/2018 Friday 13:30 GMT)
In the U.S., the non-farm payrolls increased by 200,000 in January after the figure for December last year was revised upward to an increase of 160,000. The reading for January beat analysts’ expectation for an increase of 180,000. Employment continued to increase in construction, food services, drinking places, manufacturing, and healthcare. Forecast for February: 204,000 job additions
#25: U.S. Unemployment Rate (03/09/2018 Friday 13:30 GMT)
The unemployment rate in the U.S. came in at a seventeen-year low reading of 4.1 percent in the month of January. The unemployment rate remained unchanged from the prior month and was in line with analysts’ expectation. The number of unemployed people in the country increased 108,000 to 6.68 million. Forecast for February: 4.0 percent