The United States economy takes centre stage this week, as the U.S Federal Open Market Committee come together to decide on where to set the U.S interest rate. Aside from U.S data, we also see the Australian economy heavily in focus, as the Reserve Bank of Australia meets to decide on interest rates. What other markets movers should you keep a tab on? Find out in this 30 April-4 May Weekly Forex Market Forecast.
30 April, HotForex – Much transpired over the past week that appears to have propped up flagging investor sentiment. There was the historic meeting and handshake between Korean leaders Moon and Kim. The 2.3% increase in Q1 GDP beat the 2.1% median forecast, which should assuage fears that growth has downshifted appreciably.
30 April-4 May Weekly Forex Market Forecast
Indeed, this expansion will become the second longest on record come May 1, breaking the 106-month expansion from the 1960s. Earnings have mostly come in strong, as expected, with Facebook +63% profits jump in particular overshadowing past data breach hijinx. They and fundamentals suggest there should be enough momentum in the economy to break the 120-month expansion record (covering 33 business cycles dating back to 1854).
United States Market Overview
The coming week is packed with top-tier data and the FOMC meeting, scheduled for May 1-2. The most visible reading on the economy will come from the employment report for April. Early estimates show another expected solid gain to start the second quarter. In addition to payrolls, readings on personal income and consumption should show healthy gains while producer sentiment should remain strong, and productivity predictably tepid.
The trade deficit situation is estimated to improve after a substantial deterioration in Q4 and Q1 that partly reflected hurricane-related import strength. As for the FOMC, we expect the Committee to hold policy steady and postpone the next rate hike until in June.
Top billing goes to the April payrolls report (Friday), expected to rise 210,000 in April , following a tepid and disappointing March gain of 103,000. Personal income is estimated to rise 0.4% in April (Monday), following similar gains over the last 3 months. Nominal consumption is estimated to rise 0.4% as well, resulting in a steady savings rate of 3.4%.
Chicago PMI may nudge up to 58.0 in April from 57.4 and pending home sales are seen ticking up to 108.5 in March from 107.5. The ISM manufacturing index should decline to 58.5 in April from 59.3 in March (Tuesday). The ADP employment survey is set to dip to 217k in April from 241k (Wednesday). Initial jobless claims may back up 16k to 225k for the April 28 week (Thursday), up from 209k last week that marked the lowest level since December of 1969.
Canada Market Overview
The February GDP (Tuesday) and March trade (Thursday) on tap. A rebound is expected in February GDP to a 0.1% gain after the 0.1% drop in January. March trade is expected to show further growth in exports, leaving a narrowing in the deficit to -C$2.5 bln from -C$2.7 bln. The industrial product price index is due Tuesday while the April Ivey PMI is on tap Friday.
The Markit PMI for April is due out Tuesday. Governor Poloz speaks on Tuesday. His appearances at the House and Senate this week were consistent with a gradual data-driven approach to rate hikes.
Europe Market Drivers
The Eurozone growth outlook is starting to look shaky, and while risks to the Q1 GDP number this week are to the downside, there is a lot of noise in the data at the moment, which means like the ECB we will have to wait some months to let the dust settle from weather-related disruptions.
Still, the increasingly uncertain growth outlook is likely to only impact the rate outlook for next year, and the ECB remains on course to take out net asset purchases with a short taper in the last quarter of the year.
This week’s round of data releases is unlikely to add clarity and could start more quiet than usual as much of Europe is closed Tuesday for Labour Day celebrations, which will prompt many to make a long weekend out of it. The calendar mainly focuses on the second wave of preliminary April inflation numbers and the first reading of Eurozone Q1 GDP, which it is seen decelerating to 0.4% q/q from 0.6% q/q in Q4 last year — with a risk to the downside.
Meanwhile, Final PMI readings are expected (Wednesday) to be confirmed at 56.0, and the services reading (Friday)at 55.0, leaving the composite at 55.2, all still firmly above the 50 point no change mark. Data releases also include Eurozone PPI inflation and M3 money supply growth as well as German retail sales and the Eurozone unemployment rate, with the latter expected to hold steady at 8.5%.
Germany auctions 5-year Bobls Wednesday, France sells bonds Thursday and there is also ECB speak from Constancio and Coeure on Thursday.
UK Fundamental Events
The calendar this week is highlighted by the PMI surveys along with monthly lending and money supply data from the BoE. The April manufacturing PMI survey (Tuesday) expected to come in at 54.8 after 55.1 in March, while April construction PMI (Wednesday) to rebound from the weather-affected 47.0 reading in March, and the April services PMI at 53.2 after 51.7 in March, which had also been a reading suppressed by bad weather.
Japan Market Outlook
Japan is on holiday Monday, with Tuesday bringing April auto sales. April consumer confidence (Wednesday)is expected to slip to 44.1 from 44.3. April Nikkei/Markit manufacturing PMI (Wednesday) should improve to 53.3 from 53.1.
The Caixin/Markit manufacturing PMI (Wednesday) should rise to 51.3 from 51.0.
The RBA’s meeting (Tuesday) is expected to reveal no change in the 1.50% policy setting. The March trade report (Thursday) is projected to show an improvement to an A$1.0 bln surplus from A$0.8 bln in February. Building approvals (Thursday) are seen rebounding 2.0% m/m in March after the 6.2% drop in February.
This article about 30 April-4 May Weekly Forex Market Forecast was written by Andria Pichidi, Market Analyst at HotForex. The provided article is a general marketing communication for information purposes only. It does not constitute an independent investment research. Nothing in this communication contains an investment advice or an investment recommendation. It also does not contain a solicitation for the purpose of buying or selling of any financial instrument.
All information provided gathered from reputable sources. Any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. We assume no liability for any loss arising from any investment made based on the information provided in this communication.