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 Time Currency Detail Forecast Previous
21-Mar 00:01 GBP Rightmove HPI m/m 2.90%
02:00 NZD Credit Card Spending y/y 8.90%
09:00 EUR Current Account 26.3B 25.5B
11:00 EUR German Buba Monthly Report
GBP CBI Industrial Order Expectations -13 -17
14:00 USD Existing Home Sales 5.32M 5.47M
14:30 AUD CB Leading Index m/m -0.20%
15:00 EUR Consumer Confidence -9
22-Mar 00:30 AUD HPI q/q 0.10% 2.00%
00:45 AUD RBA Assist Gov Edey Speaks
02:00 JPY Flash Manufacturing PMI 50.6 50.1
04:30 JPY All Industries Activity m/m 1.90% -0.90%
05:30 AUD RBA Gov Stevens Speaks
07:00 CHF Trade Balance 2.88B 3.51B
08:00 EUR French Flash Manufacturing PMI 50.2 50.2
EUR French Flash Services PMI 49.5 49.2
08:30 EUR German Flash Manufacturing PMI 50.9 50.5
EUR German Flash Services PMI 55.1 55.3
09:00 EUR German Ifo Business Climate 106.1 105.7
EUR Flash Manufacturing PMI 51.4 51.2
EUR Flash Services PMI 53.5 53.3
09:30 GBP CPI y/y 0.40% 0.30%
GBP PPI Input m/m 0.40% -0.70%
GBP Public Sector Net Borrowing 5.4B -11.8B
GBP RPI y/y 1.30% 1.30%
GBP Core CPI y/y 1.20% 1.20%
GBP HPI y/y 6.90% 6.70%
GBP PPI Output m/m 0.00% -0.10%
10:00 EUR German ZEW Economic Sentiment 6.3 1
EUR ZEW Economic Sentiment 8.2 13.6
13:00 USD HPI m/m 0.50% 0.40%
13:45 USD Flash Manufacturing PMI 51.6 51
USD Richmond Manufacturing Index -1 -4
20:00 CAD Annual Budget Release
23-Mar 10:00 CHF ZEW Economic Expectations -5.9
14:00 CHF SNB Quarterly Bulletin
USD New Home Sales 512K 494K
21:45 NZD Trade Balance 8M
23:50 JPY BOJ Summary of Opinions
24-Mar 07:00 EUR German Import Prices m/m -1.50%
EUR GfK German Consumer Climate 9.5
09:00 EUR ECB Economic Bulletin
09:30 GBP Retail Sales m/m 2.30%
GBP BBA Mortgage Approvals 47.5K
10:15 EUR Targeted LTRO 18.3B
12:15 USD FOMC Member Bullard Speaks
12:30 USD Core Durable Goods Orders m/m -0.20% 1.80%
USD Unemployment Claims 265K
USD Durable Goods Orders m/m -2.50% 4.90%
13:45 USD Flash Services PMI 49.8
23:30 JPY Tokyo Core CPI y/y -0.10%
JPY National Core CPI y/y 0.00%
23:50 JPY SPPI y/y 0.20%
25-Mar 05:00 JPY BOJ Core CPI y/y 1.10%
12:30 USD Final GDP q/q 1.00% 1.00%
USD Final GDP Price Index q/q 0.90% 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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