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Forex - Weekly Outlook: March 4 - 8

ForexMar 03, 2019 05:54
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© Reuters. - While trade talks between the U.S. and China continue to take center stage, this week investors will get an update on the health of the U.S. labor market on Friday and central bank developments will also be in focus.

The February employment report could underline the Federal Reserve’s case for patience when it comes to future interest rate hikes. The consensus forecast is for 180,000 new jobs and an unemployment rate of 3.9%, but wage data will be particularly closely watched at a time when inflation remains low.

Other U.S. economic data reports on tap include figures on new home sales and the Institute for Supply Management’s non-manufacturing index on Tuesday, an update on private sector hiring on Wednesday and housing starts on Friday.

Away from the U.S., the European Central Bank is to announce its latest monetary policy decision on Thursday and President Mario Draghi will speak at a press conference.

The ECB is expected to keep rates on hold, but could drop hints that cheap bank loans are imminent given that euro zone heavyweight Germany is struggling and Italy is in recession. The ECB will also release its latest economic forecasts, with downward revisions looking likely.

The Reserve Bank of Australia and the Bank of Canada are to hold their own rate setting meetings on Tuesday and Wednesday, respectively. Other global economic reports to look out for this week are China’s trade balance on Friday and Australia’s GDP report on Wednesday.

The dollar rose on Friday, hitting 10-week highs against the yen as market sentiment was boosted by a more upbeat outlook on some major world economies and the prospect of a trade deal between the U.S. and China.

The U.S. dollar index, a gauge of the currency’s value against six major currencies, rose 0.35% on Friday, posting its largest daily percentage gain in two weeks. For the month of February the index was up 0.78%.

“Looking at the whole G10 (Group of 10 major currencies) space, there has been more follow-through from U.S.-China trade optimism that was already in the process of getting priced in during the month of February,” said Stephen Gallo, European head of FX strategy, at BMO Capital Markets in London.

“Meanwhile, one of the biggest boosts to the U.S. dollar is coming from a weak yen,” he added.

Sterling gained around 1.2% for the week as fears over the prospect of a no-deal Brexit receded, while the euro ended the week up 0.3% against the greenback.

Ahead of the coming week, has compiled a list of significant events likely to affect the markets.

Monday, March 4

Australia is to release reports on building approvals and company operating profits.

The euro zone is to publish Sentix investor confidence data and figures on producer prices.

The U.K. is to publish a report on construction sector activity.

Tuesday, March 5

China is to release its Caixin services index.

The RBA is to announce its benchmark interest rate and publish a rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.

The U.K. is to release data on service sector activity.

The U.S. is to produce data on new home sales and the Institute of Supply Management is to release its index of non-manufacturing activity.

Bank of England Governor is due to testify before the House of Lords in London.

Wednesday, March 6

Australia is to publish figures on fourth quarter economic growth.

The U.S. is to release data on ADP nonfarm payrolls.

Both Canada and the U.S. are to produce trade figures.

The BoC is to announce its benchmark interest rate and publish a rate statement.

New York Fed President John Williams is to speak at an event in New York.

The Fed is to release its Beige Book, which contains insights on business activity.

Thursday, March 7

Australia is to publish figures on retail sales and trade.

The ECB is to announce its benchmark interest rate and publish a rate statement. The policy announcement is to be followed by a press conference with President Mario Draghi.

Canada is to report on building permits.

The U.S. is to release the weekly report on initial jobless claims.

Fed Governor Lael Brainard is to speak.

Friday, March 8

China is to publish its latest trade figures.

Canada is to publish its monthly employment report.

The U.S. is to round up the week with what will be a closely watched nonfarm payrolls report, along with figures on building permits and housing starts.

-- Reuters contributed to this report

Forex - Weekly Outlook: March 4 - 8

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