Forex Market Outlook For The Week May 06 – 10, 2019

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Last week, the markets rocked following interest rate decisions by the Fed and the BoE and Non-Farm Payrolls data. It was a robust start for May and the action is expected to continue next week as well. Inflation data from the U.S., GDP data from the U.K., and rate decisions from Australia and New Zealand. Here is an outlook on some of the key releases from around the world:

#1: China Services PMI (05/06/2019 Monday 01:45 GMT)

In China, the General Services PMI reported by Caixin jumped to the 54.4 level in March from the 51.1 level in the prior month. The reading for the month beat analysts’ expectations of 52.3. The reading for March pointed to a strong rate of expansion in the services sector since January last year. New orders increased the most in as many as 14 months as new export sales advanced at a strong pace ever since December 2017 following reports of increased activity in international markets. However, employment growth remained little-changed. Backlogs declined for the third month in a row. Forecast for April 2019: 54.3

#2: BoC Governor Stephen Poloz Speaks (05/06/2019 Monday 17:45 GMT)

forex market outlookStephen Poloz, Governor of Bank of Canada, is scheduled to speak about the future of the mortgage market in Canada at the event that is co-hosted by the Winnipeg Chamber of Commerce and the Canadian Credit Union Association in Winnipeg. Questions from the audience expected. Actually, the text of his speech will be released at the listed time. The speech will be delivered by him 15 minutes later.

#3: Australia Retail Sales (05/07/2019 Tuesday 01:30 GMT)

In Australia, retail trade increased by 0.8 percent on a month-over-month basis in February, following the 0.1 percent increase in the prior month. The reading for the month beat analysts’ expectations for an increase of 0.2 percent. This was the highest increase in retail trade ever since November 2017. Sales rebounded in clothing, footwear, and personal accessory retailing stores and department stores. Sales also further increased in food and household goods retailing stores. However, sales in other retailing and cafes and restaurants, and takeaway services providers remained unchanged. Forecast for March 2019: an increase of 0.2 percent is on the cards

#4: New Zealand Inflation Expectations (05/07/2019 Tuesday 03:00 GMT)

The quarterly survey carried out by the Reserve Bank of New Zealand showed that business managers’ expectation of inflation over the next two years came in at 2.02 percent during the first quarter of this year. The reading for the quarter was little changed from the reading of 2.03 percent reported for the previous period. In the meanwhile, inflation expectations for the next year dropped to 1.82 percent from 2.09 percent in the prior quarter.

#5: Australia RBA Cash Rate (05/07/2019 Tuesday 04:30 GMT)

In the meeting held in April, the Reserve Bank of Australia decided to keep the cash rate at the record low level of 1.5 percent as widely expected by analysts. With this, the central bank has extended the period of policy inaction for the 32nd month. Policymakers said that inflation rate remained low and stable and that the headline inflation is expected to decline in the near term because of lower oil prices at the start of this year. The underlying inflation is expected to remain mostly stable. Further, the Committee noted once again that it will keep monitoring the developments and decide monetary policy with a view to supporting sustainable growth and over time touch the inflation target. Forecast for May 2019: 1.25 percent

#6: Australia RBA Rate Statement (05/07/2019 Tuesday 04:30 GMT)

The Reserve Bank of Australia uses the Rate Statement as a tool to communicate with investors as regards the monetary policy. In addition to providing the outcome of members’ decision on interest rates, it also offers a commentary on the economic conditions that impacted their decision. More importantly, it provides an economic outlook and clues on future decisions.

#7: New Zealand RBNZ Official Cash Rate (05/08/2019 Wednesday 02:00 GMT)

In the meeting in March, the Reserve Bank of New Zealand decided to leave the official cash rate unchanged at the record low level of 1.75 percent as analysts expected. According to policymakers, a weaker global economic outlook – particularly among the country’s key trading partners like Australia, Europe, and China – and a decline in momentum in domestic spending, the official cash rate’s next move would be downwards. They also mentioned that building up of capacity pressures is likely to drive price inflation higher to the mid-point of the 2.0 percent target range. Forecast for May 2019:

#8: New Zealand RBNZ Monetary Policy Statement (05/08/2019 Wednesday 02:00 GMT)

In the Monetary Policy Statement, the Reserve Bank of New Zealand is required to include details as to how the inflation target will be achieved and how the policy will be formulated and implemented during the next five years. The central bank is also required to specify as to how the monetary policy has been implemented since the release of the last statement. The statement also provides valuable insight into the bank’s view on inflation and economic conditions.

#9: New Zealand RBNZ Rate Statement (05/08/2019 Wednesday 02:00 GMT)

The Reserve Bank of New Zealand uses the Rate Statement as a tool to communicate with investors as regards the monetary policy. In addition to providing the outcome of members’ decision on interest rates, it also offers a commentary on the economic conditions that impacted their decision. More importantly, it provides an economic outlook and clues on future decisions.

#10: New Zealand RBNZ Press Conference (05/08/2019 Wednesday 03:00 GMT)

Governor of the Reserve Bank of New Zealand holds a press conference after the announcement of the interest rate. It lasts for about 30 minutes and has two parts. In the first part, he reads a prepared statement. The second part is for questions by the press. As the questions often lead to unscripted answers, heavy market volatility can be expected.

#11: Canada Trade Balance (05/09/2019 Thursday 12:30 GMT)

In Canada, the trade deficit narrowed to C$2.90 billion in February after the reading for the prior month was revised downward to C$3.09 billion. Analysts had expected the trade deficit to come in at C$3.5 billion. Imports dropped 1.6 percent on a month-over-month basis, led by a reduction in the purchase of gold. Exports dropped 1.3 percent because of reduced non-energy product sales.

#12: U.S. Fed Chair Jerome Powell Speaks (05/09/2019 Thursday 12:30 GMT)

Jerome Powell, Federal Reserve Chair, is scheduled to deliver the opening remarks at the Federal Reserve System Community Development Research Conference, which is being held in Washington DC.

#13: U.S. PPI (05/09/2019 Thursday 12:30 GMT)

In the U.S., the producer prices for final demand goods rose by 0.6 percent on a month-on-month basis in March, following the 0.1 percent increase in February. The reading for March beat analysts’ expectations of 0.3 percent. This was the biggest increase ever since last October. Goods prices jumped 1.0 percent, boosted by an increase of 5.6 percent in energy costs. Additionally, the prices of the services increased by 0.3 percent. The core PPI, which excludes energy and food, rose 0.3 percent from the previous month, following a 0.1 percent increase in February. The core PPI reading also beat analysts’ expectations of 0.2 percent. Forecast for April 2019: both PPI and Core PPI are expected to come in at 0.2 percent

#14: Australia RBI Monetary Policy Statement (05/10/2019 Friday 01:30 GMT)

Released on a quarterly basis, the Monetary Policy Statement provides valuable insight into the central bank’s view on inflation and economic conditions.

#15: U.K. GDP (05/10/2019 Friday 08:30 GMT)

The British economy grew in February as manufacturers stockpiled goods prior to Brexit. According to the Office for National Statistics, gross domestic product increased by 0.2 percent in February on a month-on-month basis, confounding analysts’ expectations for a flat growth as Brexit. Forecast for March 2019: flat growth is on the cards

#16: U.K. Manufacturing Production (05/10/2019 Friday 08:30 GMT)

In the U.K., manufacturing production increased 0.9 on a month-on-month basis in February 2019, down slightly from 1.1 percent in the previous month. Analysts had expected the reading to come in at 0.2 percent. Forecast for March 2019: an increase of 0.1 percent is on the cards

#17: U.K. Preliminary GDP (05/10/2019 Friday 8:30 GMT)

The British economy grew 0.2 percent in the final quarter of last year, down from the 0.7 percent growth reported in the previous quarter. Government spending and household consumption supported the growth, while net trade and gross capital formation contributed negatively to the growth. Forecast for the first quarter of 2019: a growth of 0.5 percent is on the cards

#18: Canada Employment Change and Unemployment Rate (05/10/2019 Friday 12:30 GMT)

The Canadian economy dropped 7,200 jobs in March after adding 55,900 in the prior month. Analysts had expected the economy to add 1,000 jobs. This is the first decline in employment ever since August. Meanwhile, the unemployment rate came in at 5.8 percent. It was unchanged from the prior month and in line with analysts’ expectations. This is the highest jobless rate ever since October last year. Unemployment has remained at this level for three months now.

#19: U.S. CPI and Core CPI (05/10/2019 Friday 12:30 GMT)

In the U.S., the Consumer Price Index rose by 0.4 percent on a month-on-month basis in March. This is the biggest increase ever since January 2018. Inflation came in at 0.2 percent in February. The reading for March beat analysts’ expectations of 0.3 percent. Core consumer prices increased by 0.1 percent in March. Forecast for April 2019: CPI and Core CPI are expected to come in at 04 percent and 0.2 percent, respectively

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