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Weekly Outlook: March 30 – April 03

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All eyes this week will be on the US jobs report which is seen as a key for the Fed’s potential rate hike in June. However, there are many factors to consider for a possible hike by the Fed, as recent developments in the US economy are not in line with the Fed’s preferences (i.e. inflation).

In addition, the main reason why the greenback is appreciating against its majors is because the markets believe that the Fed is on the right track in raising the key interest rate on their next two policy meetings.

Therefore, the markets will be watching this very closely.

The NFP number looks to be strong again, at 242k in March. If we get a figure above 200k, this could have a potentially bullish effect on the dollar, which could add further pressure to the 1.0600 (EUR/USD) level, and it would mark the 14th consecutive month of job gains which exceeds the 200k. February’s US Non-farm payrolls increased by 295k after a downwardly revised 239k rise in January. At the same time, the jobless rate fell down to 5.5% from 5.7%, the lowest since 2008. Average Hourly Earnings for March are also coming out, expected to show an increase of 0.2% mom.

Today, the focus will be turned on Germany’s Preliminary CPI. The prices of Eurozone’s largest economy is expected to have grown 0.3% yoy in March from 0.1% yoy the last month, reflecting the recent recovery in oil prices which managed to be held above $40. In Eurozone, the final Consumer Confidence is expected to show that morale among domestic investors improved for the fourth consecutive month but still in the negative territory up to -3.7 the highest since mid-2007. Clearly there is still a long way to go with the Eurozone recovery, but it is headed in the right direction, and that is the most important thing.

In UK, Mortgage Approvals are expected to have increased to 61.50K in February from 60.79k before as well as mortgage lending which is expected to be 62,000k from 60,786k in January. We also get Gfk Consumer Confidence for May. In the US, we have Personal Income and Personal Spending for February, alongside the Personal Consumption Expenditure for February. Pending Home Sales for February are also coming out.

On Tuesday there is a heavy economic calendar, thus traders should be prepared for more volatility than usual. The focus of the world will be on the G7 Meeting which is scheduled. The finance ministers of the group of seven industrialized ministers meet several times in the year to discuss economic policies. Early in the European morning, in Germany, the spotlight of the day will be the release of the Unemployment Change and the Unemployment Rate seasonally adjusted for March. The consensus for the Unemployment Change is to improve to -12k from -20k before and for the Unemployment rate to remain the same as February at 6.5%. Retail Sales are expected to be published and to have slowed down in February to 3.7% yoy from 5.3% yoy before. In UK, investors will keenly eye the GDP figures for the fourth quarter of 2014. The market expects UK economy to have advanced by 2.7%, on a yearly basis, the fastest growth in almost eight years. In Eurozone, the preliminary Inflation Rate is forecasted to show that in March the prices of goods and services have decreased by 0.1% yoy from a decrease by 0.3% yoy the previous month. Basically, the market expects an improved deflation rate for the second time in a row.

Unemployment rate for February will also attract some of the attention even if the market’s consensus come true and the indicator has remained at 11.2%.

In US, investors will keenly eye the Consumer Confidence for March. The morale among the investors is expected to have decreased slightly to 96.0 from 96.4 in February. Canada’s Gross Domestic Product is expected to release and to show a decline of -0.2% mom versus the expansion of 0.3% mom prior.
The final Markit Manufacturing PMI for UK, Greece, Italy and France are coming out. All of them are expected to have increased, however, none of these is likely to be particularly market-affecting. Investors will also be keeping a close eye on ADP Employment Change which is expected to show that the pace of hiring in the private sector have increased in March to 230k. That would be in line with the consensus forecast of around 242k for Friday’s Non-farm Payrolls. Remember though that the ADP report is an imperfect predictor of the NFP figure; last month, the ADP was at 212k while the NFP was 295k. US ISM manufacturing index is forecast to decline to 52.5 in March from 52.9, which would be a contrast with the improvement shown in other countries and could weaken USD, somewhat.

On Thursday, investors will be interested in the US weekly report on unemployment benefits claims. Both Indicators are upbeat the last four weeks, raising hopes for Friday’s NFP report. Factory Orders are expected to have slowed in March by -0.5% from -0.2%, on a monthly basis. Furthermore, European Central Bank will release the Monetary Policy Meeting Accounts.

There are no Eurozone, Australia or Canada indicators out on Friday since is Good Friday. The only indicators on the agenda are from the US as mentioned above.

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