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Forex - Weekly outlook: April 14 -18

Published 04/13/2014, 05:15 AM
Dollar edges higher on Friday, gains seen limited
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Investing.com - The dollar edged higher against a basket of major currencies on Friday as a global selloff sent equities markets lower, but gains looked likely to be temporary amid expectations that U.S. interest rates are likely to remain on hold for some time.

USD/JPY ended Friday’s session at 101.61, after weakening to 101.31 earlier in the trading day, the lowest since March 19. For the week, the pair lost 1.41%.

Demand for the yen continued to be underpinned after the Bank of Japan indicated earlier in the week that it was unlikely to implement further stimulus measures in the short term.

The dollar was almost unchanged against the euro at the close of trade, with EUR/USD trading at 1.3884, after touching session highs of 1.3905 earlier. The pair ended the week 1.04% higher, the largest weekly gain since September.

The greenback briefly found support after data on Friday showed that U.S. producer prices rose 0.5% in March, the largest increase in nine months and ahead of expectations for a 0.1% increase.

However, the dollar remained under pressure after the minutes of the Federal Reserve’s March meeting indicated that an interest rate increase is unlikely to be warranted for some time.

The Fed’s March meeting minutes, released on Wednesday, showed that policymakers discussed whether to keep interest rates at record lows until inflation moves higher, and did not elaborate on a possible timeframe for when rates could start to rise.

Last month the U.S. central bank reduced the monthly pace of asset purchases by $10 billion, to $55 billion, and repeated it is likely to continue paring the program in “further measured steps.”

The dollar gained ground against the pound on Friday, with GBP/USD falling 0.32% to 1.6729 at the close. The drop in sterling came after data showed that U.K. construction output fell in February as heavy rain, which led to flooding in parts of the country, delayed work.

The dollar was also higher against the commodity linked Australian and Canadian dollars. AUD/USD slipped 0.18% to 0.9398 on Friday, paring back the week’s gains to 1.42%, while USD/CAD advanced 0.41% to 1.0978.

In the week ahead, market watchers will be focusing on speeches by Fed Chair Janet Yellen, as well as reports on U.S. retail sales and housing starts. Data on first quarter Chinese economic growth and a rate decision by the Bank of Canada will also be closely watched.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, April 14

The euro zone is to release data on industrial production.

The U.S. is to produce data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.

Tuesday, April 15

The Reserve Bank of Australia is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective.

Switzerland is to release data on producer price inflation.

The U.K. is to release data on consumer price inflation, which accounts for the majority of overall inflation.

The ZEW Institute is to release its closely watched report on German economic sentiment, a leading indicator of economic health.

Canada is to publish data on manufacturing sales. At the same time, the U.S. is to produce data on consumer inflation. Later Tuesday, Fed Chair Janet Yellen is to speak; her comments will be closely watched.

Wednesday, April 16

New Zealand is to release a report on consumer inflation.

China is to publish data on first quarter gross domestic product, the broadest indicator of economic activity and the leading indicator of economic growth. The nation is also to release data on industrial production.

Bank of Japan Governor Haruhiko Kuroda is to speak at an event in Tokyo; his comments will be closely watched.

The U.K. is to release official data on the change in the number of people unemployed and the unemployment rate, as well as data on average earnings and public sector borrowing.

The ZEW Institute is to publish a report on economic expectations in Switzerland, a leading indicator of economic health.

The euro zone is to release revised data on inflation.

The U.S. is to produce reports on housing starts, building permits and industrial production.

The Bank of Canada is to announce its benchmark interest rate and publish its monetary policy statement, which outlines economic conditions and the factors affecting the bank’s decision. The announcement is to be followed by a press conference.

Later Wednesday, Fed Chair Janet Yellen is to speak at an event in New York.

Thursday, April 17

Australia is to release private sector data on business confidence, as well as official data on new vehicle sales.

The euro zone is to publish data on the current account, while Germany is to produce data on producer price inflation.

Canada is to publish data on consumer inflation.

The U.S. is to publish data on initial jobless claims and a report on manufacturing activity in the Philadelphia region.

Friday, April 18

Markets in Europe and the U.S. will be closed for the Good Friday holiday.

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