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Next week’s Forex forecast

Sergiy Zlyvko
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State of the U.S. economy still raises more questions than it answers about the possible timing of the start of monetary tightening by the Fed. It therefore remains that key consideration should be paid to published reports and comments of the Fed (including speech and Janet Yellen, scheduled for May 1). Especially that in the upcoming week there will be another meeting of FOMC. While we are still waiting for the continuation of quantitative easing folding at the same pace, which can give moderate support for dollar. But, at the same time, not enough aggressive comments are able to neutralize this effect and may disappoint.

Japan next week will publish a fairly large number of reports. There is no doubt that the focus will attract decision on monetary policy on April 30. The first month after the tax increase comes to an end and perhaps a regulator will change the rhetoric a little, noting the need for further stimulus, which could trigger a weakening of yen and return the pair to the resistance on 102.70 mark with further targeting at 103.40. Also data on retail sales for March will be published. Sharp increase is possible as the population on the eve of the tax increase was slow to commit the necessary purchases. Furthermore, attention should be paid to data on business activity in the manufacturing sector and a report on industrial production. Insufficiently strong indicators will be another reason for the Bank of Japan to think about additional incentives. Many reports are published on the coming week and the U.S. In addition to the Fed’s decision on monetary policy, growth of the U.S. economy in the 1st quarter (April 30) will attract the attention of market. Signs of a slowdown in the economy could have a pressure on the dollar, as it will push the rate increase for an indefinite period (in this case, USDJPY could easily go back to supporting level of 102.00). Non-Farm payrolls report will have significant influence on the pair. But the dollar will receive support only if the numbers exceed the forecast level of 207,000.

Eurozone in an amount of reports scheduled for publication next week by a little behind the U.S., but all the same there is what to look for. On Tuesday, April 29 preliminary data on consumer price inflation in Germany will be published. If the index will continue to fall, the euro could come under pressure, aiming to support breakthrough at 1.3800, as it would be another signal to the fact that the ECB might have to think about the intervention. On Wednesday, Germany is going to publish data on retail sales and the labor market; Eurozone – inflation report. Moderately negative statistics will also push the currency down, although it is possible that on the eve of the American statistics, movement will be sufficiently restrained. Final data on business activity in the manufacturing sector on Friday will not produce an impression most likely unless demonstrate strong deviations from the forecasts.

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