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Forex - Weekly outlook: April 7 - 11

Published 04/06/2014, 05:23 AM
Dollar give up gains vs. euro, yen despite upbeat U.S. jobs report
- - The dollar pared back gains against the euro on Friday and fell against the yen, despite the latest U.S. employment report indicating that the economic recovery is on track.

The Labor Department reported Friday that the U.S. economy added 192,000 jobs in March, below expectations for jobs growth of 200,000. February’s figure was revised up to 197,000 from a previously reported 175,000. The U.S. unemployment rate remained unchanged at 6.7%, compared to expectations for a tick down to 6.6%.

The data disappointed some market expectations for a more robust reading but indicated that the Federal Reserve is likely to stick to the current pace of reductions to its asset purchase program.

EUR/USD ended Friday’s session down 0.12% to 1.3703, after falling to a five-week low of 1.3673 earlier. For the week, the pair lost 0.52%.

The shared currency remained under pressure after the European Central Bank said Thursday it would use unconventional measures if necessary to stave off the risk of deflation in the euro zone.

ECB President Mario Draghi said the governing council was "unanimous" in its commitment to using all unconventional instruments within its mandate to cope with the risk of low inflation becoming entrenched. He added that the bank discussed the possibility of negative deposit rates. The comments came after the bank left rates on hold at a record low 0.25%.

USD/JPY fell 0.63% to end Friday’s session at 103.27, after hitting session highs of 104.13 immediately following the release of the jobs report.

Elsewhere, the Canadian dollar rose to five-week highs against the greenback, bolstered by a stronger-than-forecast domestic jobs report for March.

Statistics Canada reported that the economy added 42,900 jobs last month, well above the forecast jobs growth of 21,500, while the unemployment rate unexpectedly ticked down to 6.9% from 7.0% in February.

USD/CAD fell 0.51% to settle at 1.0980, after falling to a session low of 1.0955 after the release of the data. For the week, the pair ended down 0.67%.

The Australian and New Zealand dollar were also higher against the greenback on Friday, with AUD/USD settling at 0.9292, not far from the four month peaks of 0.9306 hit earlier in the session. NZD/USD was up 0.63% to 0.8598.

In the week ahead, markets will be focusing on Wednesday’s minutes of the Fed’s most recent policy setting meeting. Monetary policy meetings by the Bank of Japan and the Bank of England will also be closely watched.

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

Monday, April 7

Markets in China will be closed for a national holiday.

The Swiss National Bank is to publish data on its foreign currency reserves. This data is closely scrutinized for indications of the size of the bank’s operations in currency markets. Switzerland is also to release data on consumer price inflation.

The Bank of Canada is to publish its quarterly business outlook survey.

Tuesday, April 8

Both Australia and New Zealand are to publish private sector reports on business confidence.

The BoJ 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. Japan is also to publish data on the current account.

Switzerland is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.

The U.K. is to release a report on industrial and manufacturing production, a leading indicator of economic health.

Canada is to produce data on building permits.

Wednesday, April 9

Australia is to release private sector data on consumer sentiment, as well as official data on home loans.

Both Germany and the U.K. are to produce data on the trade balance, the difference in value between imports and exports.

Later Wednesday, the Federal Reserve is to publish what will be the closely watched minutes of its latest policy meeting.

Thursday, April 10

New Zealand is to release private sector data on manufacturing activity.

Australia is to release data on the change in the number of people employed and the unemployment rate, in addition to private sector data on inflation expectations.

Japan is to produce a report on core machinery orders.

The BoE is to announce its benchmark interest rate.

Canada is to publish data on new house price inflation.

In the U.S., the Labor Department is to release its weekly report on initial jobless claims.

Friday, April 11

The BoJ is to publish monetary policy meeting minutes.

China is to produce data on consumer price inflation.

The U.S. is to round up the week with data on producer price inflation and the preliminary report on the University of Michigan’s consumer sentiment index.

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