Weekly Forex Preview: Canada budget in focus

Mar 21, 6:12 am
Canada_budget_BOC

The US Dollar closed the week as the weakest currency led by the FOMC meeting which was more dovish than market expectations. With only two rate hikes projected for 2016, the markets saw the Greenback ease across the board. The Yen was the top performer, gaining 2.02% for the week as the BoJ’s meeting saw no changes to monetary policy but at the same time signaled potential easing bias at the next meeting. The Canadian dollar was the second best currency, rising 1.64% for the week as broadly better than expected data and rising Oil prices kept the CAD well supported.

Weekly Spot FX Performance – 18/03/2016 (Source: Finviz.com)
Weekly Spot FX Performance – 18/03/2016 (Source: Finviz.com)

The commodity risk currencies eased back towards the end of the week but not before notching decent gains. The week ahead is expected to remain quiet with Canada’s fiscal stimulus policies likely to take focus as the annual budget is presented.

Fundamentals for the Week 21/03 – 25/03

Date TimeCurrency Detail Forecast Previous
21-Mar00:01GBPRightmove HPI m/m2.90%
02:00NZDCredit Card Spending y/y8.90%
09:00EURCurrent Account26.3B25.5B
11:00EURGerman Buba Monthly Report
GBPCBI Industrial Order Expectations-13-17
14:00USDExisting Home Sales5.32M5.47M
14:30AUDCB Leading Index m/m-0.20%
15:00EURConsumer Confidence-9
22-Mar00:30AUDHPI q/q0.10%2.00%
00:45AUDRBA Assist Gov Edey Speaks
02:00JPYFlash Manufacturing PMI50.650.1
04:30JPYAll Industries Activity m/m1.90%-0.90%
05:30AUDRBA Gov Stevens Speaks
07:00CHFTrade Balance2.88B3.51B
08:00EURFrench Flash Manufacturing PMI50.250.2
EURFrench Flash Services PMI49.549.2
08:30EURGerman Flash Manufacturing PMI50.950.5
EURGerman Flash Services PMI55.155.3
09:00EURGerman Ifo Business Climate106.1105.7
EURFlash Manufacturing PMI51.451.2
EURFlash Services PMI53.553.3
09:30GBPCPI y/y0.40%0.30%
GBPPPI Input m/m0.40%-0.70%
GBPPublic Sector Net Borrowing5.4B-11.8B
GBPRPI y/y1.30%1.30%
GBPCore CPI y/y1.20%1.20%
GBPHPI y/y6.90%6.70%
GBPPPI Output m/m0.00%-0.10%
10:00EURGerman ZEW Economic Sentiment6.31
EURZEW Economic Sentiment8.213.6
13:00USDHPI m/m0.50%0.40%
13:45USDFlash Manufacturing PMI51.651
USDRichmond Manufacturing Index-1-4
20:00CADAnnual Budget Release
23-Mar10:00CHFZEW Economic Expectations-5.9
14:00CHFSNB Quarterly Bulletin
USDNew Home Sales512K494K
21:45NZDTrade Balance8M
23:50JPYBOJ Summary of Opinions
24-Mar07:00EURGerman Import Prices m/m-1.50%
EURGfK German Consumer Climate9.5
09:00EURECB Economic Bulletin
09:30GBPRetail Sales m/m2.30%
GBPBBA Mortgage Approvals47.5K
10:15EURTargeted LTRO18.3B
12:15USDFOMC Member Bullard Speaks
12:30USDCore Durable Goods Orders m/m-0.20%1.80%
USDUnemployment Claims265K
USDDurable Goods Orders m/m-2.50%4.90%
13:45USDFlash Services PMI49.8
23:30JPYTokyo Core CPI y/y-0.10%
JPYNational Core CPI y/y0.00%
23:50JPYSPPI y/y0.20%
25-Mar05:00JPYBOJ Core CPI y/y1.10%
12:30USDFinal GDP q/q1.00%1.00%
USDFinal GDP Price Index q/q0.90%0.90%

Time: GMT

Currencies/Events to Watch this Week

AUD: Data from Australia for the week ahead is quiet with RBA Governor Stevens due to speak. Housing price index data for the quarter is forecasted to rise 0.10%, slower than 2.0% increase previously. With the recent appreciation in the Australian Dollar, RBA Governor’s speech might gain attention for any references to verbally talking down the Australian dollar.

NZD: Data from New Zealand includes the credit card spending and trade balance data for the week. Both of these events is unlikely to garner much attention or influence the Kiwi’s exchange rates, leaving most of the currency moves to technical trading.

JPY: Data from Japan for the week ahead includes flash manufacturing PMI followed by industrial activity. Of importance however will be Thursday’s inflation data, where the BoJ’s Core CPI will be closely scrutinized as it slipped to 1.10% from 1.20% previously. A further drop in the BoJ’s core inflation could stoke up speculation for April easing from the BoJ.

EUR: It will be a quiet week for the Euro with the exception of German Ifo business climate and the German ZEW economic sentiment. Flash PMI numbers are also released during the week. The ECB’s TLTRO auction is due on Thursday with the recent action seeing 18.3 billion Euros being taken up by banks. With the rates now cut sharply, the TLTRO auction might see a bigger take up from the banks.

CAD: The only major release from Canada this week is the Annual Budget Release. In recent weeks, Canadian premier has given hints on a toned down budget where fiscal stimulus spending is expected to increase, but at a more moderate pace than initially expected. The BoC left interest rates unchanged earlier this month as the Central Bank opted to see the outcome of the budget proposals.

USD: The US Dollar will see data from existing home sales among Fed member speeches. Durable goods orders will be under scrutiny as expectations call for a decline of -2.40% and -0.20% on the core and headline orders respectively. On Friday, the final GDP data for the fourth quarter will be released with expectations that the fourth quarter GDP growth was unchanged at 1.0%

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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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