Last week, the US dollar enjoyed gains for yet another week. It defied news releases that could have just turned it the other way. Will this trend continue?
The Non-Farm Payrolls data as the gain jobs was just about 164,000. There was a slowdown in the wages as well. Though the greenback struggled initially, it recovered quickly. As expected, the Fed left the rates unchanged but said the inflation target was symmetric. Markets took it as a hint that the Fed might tolerate higher inflation. The dollar dropped a little bit before rising.
The greenback rose against the euro, following a moderation in economic growth and the inflation rate in the first quarter. The dollar also gained considerably against the British pound, which suffered because of disappointing PMI data and concerns related to a more hardline stance taken by the British government after the resignation of the Home Secretary Rudd.
In the upcoming week, the key U.S. release scheduled is the inflation report. The week also features two interest rate decisions. Here is an outlook on the economic releases in the coming week:
#1: Australia Retail Sales (05/08/2018 Tuesday 01:30 GMT)
In Australia, retail sales increased 0.6 percent on a month-on-month basis in February after the figure for the prior month was revised upward to an increase of 0.2 percent. The reading for the month beat analysts’ expectation for a 0.3 percent rise. This is the highest increase in retail sales since November last year. Retail sales rebounded in clothing, footwear, and personal accessories sectors. Further, sales grew in department stores after falling in the previous three months. Sales increased in household goods, food retailing, and restaurants, cafes, and takeaway food sectors at a faster pace. Forecast for March 2018: 0.2 percent increase
#2: New Zealand Inflation Expectations (05/08/2018 Tuesday 03:00 GMT)
In New Zealand, inflation expectations rose to 2.10 percent during the first quarter of this year from 2.0 percent in the final quarter of last year.
#3: U.S. Federal Reserve Chair Jerome Powell Speaks (05/08/2018 Tuesday 07:15 GMT)
Jerome Powell, Federal Reserve Chairman, is scheduled to deliver a speech in Zurich on “Monetary Policy Influences on Global Financial Conditions and International Capital Flows” at the Swiss National Bank and International Monetary Fund High-Level Conference on the International Monetary System, in Zurich. The audience is expected to ask questions. The markets often turn volatile during his speeches as traders make an attempt to understand the direction of future interest rate decisions.
#4: Australia Annual Budget Release (05/08/2018 Tuesday 09:30 GMT)
Released annually, the document provides an outline of the government’s yearly budget. It includes expected income and spending levels, financial objectives, borrowing levels, and planned investments. Government’s borrowing and spending levels have an impact on the country’s economic growth. While increased spending creates work, borrowing impacts the country’s credit rating and provides information about the underlying fiscal position.
#5: U.S. PPI (05/09/2018 Wednesday 12:30 GMT)
In the U.S., the producer prices of final demand goods rose by 0.3 percent on a month-over-month basis in March, following on the 0.2 percent rise in the month of February. The reading for March exceeded analysts’ expectation for a 0.1 percent increase. Prices of goods rose because of higher costs of food. Energy costs continued to fall. Prices of services also rose by 0.3 percent in the month of March, the same rate as in the prior month. The core PPI, excluding food and energy, rose by 0.3 percent, above analysts’ expectation for an increase of 0.2 percent. PPI and core PPI forecast for April 2018: 0.2 percent increase
#6: U.S. Crude Oil Inventories (05/09/2018 Wednesday 14:30 GMT)
In the U.S., crude oil stocks jumped 6.218 million barrels during the week that ended on April 27 after registering an increase of 2.17 million barrels in the prior period. Analysts had expected crude oil stocks to increase by 0.739 million barrels. This is by far the largest increase in crude oil inventories in 13 weeks. Gasoline inventories rose by 1.171 million barrels after the 0.84 million barrels increase in the prior week. Analysts had expected gasoline stocks to decline by 0.587 million barrels.
#7: New Zealand Official Cash Rate (05/09/2018 Wednesday 21:00 GMT)
In the meeting in March, the Reserve Bank of New Zealand decided to maintain its official cash rate at the record low level of 1.75 percent as was widely expected. The central bank changed the key interest rate in the month of November 2016. Policymakers said that gradual improvement is seen in global economic growth despite the weaker-than-expected fourth quarter GDP growth because of the effect of weather on agricultural production. Additionally, the inflation remained subdued. The policy statement, however, highlighted that signs of emerging pressures such as an increase in agricultural and commodity existed. As a result, the monetary policy will continue to remain accommodative for some more time. Forecast for April 2018: 1.75 percent
#8: Reserve Bank of New Zealand Monetary Policy Statement (05/09/2018 Wednesday 21:00 GMT)
Released on a quarterly basis by the Reserve Bank of New Zealand, the monetary policy statement provides information on how the central bank will achieve its inflation targets, how they are planning to design and implement the monetary policy over the coming five years, and how the monetary policy was implemented after the previous release of the statement. The statement provides insight into the central bank’s view on inflation and economic conditions.
#9: Reserve Bank of New Zealand Rate Statement (05/09/2018 Wednesday 21:00 GMT)
The Reserve Bank of New Zealand releases the Rate Statement eight times in a year. The central bank uses this Statement as a tool to communicate with traders as regards the monetary policy. It provides the outcome of the latest interest rate decision and a commentary on the economic conditions that impacted the decision. More importantly, the Statement discusses the country’s economic outlook and provides clues on future decisions.
#10: Reserve Bank of New Zealand Press Conference (05/09/2018 Wednesday 22:00 GMT)
The Reserve Bank of New Zealand holds a press conference one hour after the announcement of the official cash rate. The press conference lasts for about 30 minutes and has two parts: the reading of a prepared statement and answering questions by the press. As questions often lead to unscripted answers, heavy market volatility can be expected during the period.
#11: Reserve Bank of New Zealand Governor Adrian Orr Speaks (05/10/2018 Thursday 01:10 GMT)
Adrian Orr, Governor of the Bank of New Zealand, is scheduled to testify in Wellington before the Finance and Expenditure Select Committee on the Monetary Policy Statement. Markets often turn volatile during his speeches. This is because traders look for interest rate clues.
#12: U.K. Manufacturing Production (05/10/2018 Thursday 08:30 GT)
In the U.K., manufacturing production unexpectedly declined 0.2 percent in February. Manufacturing production fell for the first time in nearly a year and declined from the revised production growth of zero for the previous month. Analysts had expected manufacturing production to increase by 0.2 percent. According to the Office for National Statistics, output dropped because of decline in oil refining and electrical appliance manufacturing. On a year-on-year basis, manufacturing production rose by 2.5 percent. Analysts had expected an increase of 3.3 percent. Monthly forecast for March 2018: a decline of 0.2 percent
#13: Bank of England Inflation Report (05/10/2018 Thursday 11:00 GMT)
The Bank of England releases the Inflation Report on a quarterly basis. The Report provides the central bank’s economic growth and inflation projection over the next two years. The Governor of the Bank of England subsequently holds a press conference for discussing the contents of the report after its release.
#14: Bank of England Monetary Policy Committee Official Bank Rate Votes (05/10/2018 Thursday 11:00 GMT)
In the meeting of the Monetary Policy Committee of the Bank of England held in March, two members voted to increase the UK interest rates. The central bank maintained the interest rate steady at the 0.5 percent level after the MPC officials voted 2-0-7 during the course of the most recent meeting. MPC members Michael Saunders and Ian McCafferty voted in favor of increasing the interest rate to 0.75 percent.
#15: Bank of England Monetary Policy Summary (05/10/2018 Thursday 11:00 GMT)
Released on a monthly basis, the Bank of England uses the Monetary Policy Summary as a tool to communicate with the investors as regards the monetary policy. It provides details about the outcome of the interest rate decision and other policy measures. It also provides a commentary as to what economic conditions influenced the members’ votes. More importantly, it provides an economic outlook and offers clues on future decisions.
#16: Bank of England Official Bank Rate (05/10/2018 Thursday 11:00 GMT)
The MPC members of the Bank of England voted seven to two to maintain the Official Bank Rate at the 0.5 percent level in the meeting held on March 22 because of a likelihood of pay growth picking up in response to labor market tightening and inflation remaining above the 2.0 percent target in the shorter term. The bank also reiterated that the ongoing monetary policy tightening of over the period forecast earlier is required to return inflation to its sustainable target level. This raises expectations of a rate hike in May. It is expected that the voting will be 2-0-7 and the interest rate will be maintained at the 0.5 percent level.
#17: U.S. CPI/Core CPI (05/10/2018 Thursday 12:30 GMT)
In the United States, consumer prices declined 0.1 percent on a month-over-month basis in March after recording a 0.2 percent increase in February. Analysts had expected a flat reading. A drop in the gasoline index outweighed a rise in the shelter, food, and medical care indices. Excluding energy and food, consumer prices rose 0.2 percent in the month of March, the same rate as in February. Forecast for April 2018: CPI – 0.3 percent increase and Core CPI – 0.2 percent increase
#18: Canada Employment Change/Unemployment Rate (05/11/2018 Friday 12:30 GMT)
Canada added 32,300 jobs in March which was above analysts’ expectations for an addition of 20,000 jobs. Jobs increased because of an increase in hiring of workers for full-time jobs. The number of workers hired for part-time work declined.
In Canada, the unemployment rate remained unchanged at the 5.8 percent level in March. This was in line with analysts’ expectation. The unemployment rate has remained at the lowest level since 1976 for the second month in a row.
Forecast for April 2018: 19,500 job additions and an unemployment rate of 5.8 percent
#19: European Central Bank President Mario Draghi Speaks (05/11/2018 Friday 13:15 GMT)
Mario Draghi, President of the European Central Bank, is scheduled to speak in Florence at The State of the Union’s 8th edition organized by the European University Institute. Markets often turn volatile during his speeches as investors look for interest rate clues.