Weekly Forex Preview: RBNZ, BoC and ECB decisions ahead

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The US Dollar closed the week as the weakest currency as a strong risk-on sentiment saw the AUD and the NZD close the week with gains of 4.31% and 2.81% respectively. The gains came on a broadly positive data from Australia where last week the RBA left rates unchanged while the quarterly GDP expanded 0.60%, better than expected. The US Dollar, on the other hand, was weaker with the Nonfarm payrolls showing a decline in average wage earnings despite the unemployment rate staying at 4.90% for the second month in a row. The monthly number of jobs added to the economy also increased by 242k, beating estimates of 195k.

Weekly Spot FX Performance – 04/03/2016 (Source: Finviz.com)
Weekly Spot FX Performance – 04/03/2016 (Source: Finviz.com)

The British Pound was the surprise last week as the GBP closed with gains of 2.57%, just a week after GBPUSD fell to multi-year lows. The gains came despite a weaker than expected services PMI data and soft manufacturing and construction PMI survey data.

Fundamentals for the Week 07/03 – 11/03

Date Time Currency Detail Forecast Previous
07-Mar 00:30 AUD AIG Construction Index 46.3
02:30 AUD ANZ Job Advertisements m/m 1.00%
05:40 JPY BOJ Gov Kuroda Speaks
07:00 JPY Leading Indicators 101.60% 102.10%
09:00 EUR German Factory Orders m/m -0.40% -0.70%
10:00 CHF Foreign Currency Reserves 575B
11:30 EUR Sentix Investor Confidence 8.8 6
All Day EUR Eurogroup Meetings
17:00 USD Labor Market Conditions Index m/m 0.4
19:00 USD FOMC Member Brainard Speaks
19:30 USD FOMC Member Fischer Speaks
22:00 USD Consumer Credit m/m 16.8B 21.3B
23:45 NZD Manufacturing Sales q/q 4.20%
08-Mar 01:20 AUD RBA Deputy Gov Lowe Speaks
01:50 JPY Current Account 1.66T 1.64T
JPY Final GDP q/q -0.40% -0.40%
JPY Bank Lending y/y 2.30%
JPY Final GDP Price Index y/y 1.50% 1.50%
02:01 GBP BRC Retail Sales Monitor y/y 2.60%
02:30 AUD NAB Business Confidence 2
Tentative CNY Trade Balance 329B 406B
05:45 JPY 30-y Bond Auction 1.07|3.0
Tentative CNY USD-Denominated Trade Balance 51.2B 63.3B
07:00 JPY Consumer Confidence 42.3 42.5
08:00 JPY Economy Watchers Sentiment 47.5 46.6
08:45 CHF Unemployment Rate 3.50% 3.40%
09:00 EUR German Industrial Production m/m 0.60% -1.20%
09:45 EUR French Gov Budget Balance -70.5B
EUR French Trade Balance -3.7B -3.9B
10:15 CHF CPI m/m -0.10% -0.40%
12:00 EUR Revised GDP q/q 0.30% 0.30%
All Day EUR ECOFIN Meetings
13:00 USD NFIB Small Business Index 94.5 93.9
15:15 CAD Housing Starts 181K 166K
15:30 CAD Building Permits m/m 11.30%
09-Mar 01:30 AUD Westpac Consumer Sentiment 4.20%
01:50 JPY M2 Money Stock y/y 3.20% 3.20%
02:30 AUD Home Loans m/m -2.70% 2.60%
08:00 JPY Prelim Machine Tool Orders y/y -17.20%
11:30 GBP Manufacturing Production m/m 0.20% -0.20%
GBP Industrial Production m/m 0.60% -1.10%
17:00 CAD BOC Rate Statement
CAD Overnight Rate 0.50% 0.50%
GBP NIESR GDP Estimate 0.40%
USD Wholesale Inventories m/m -0.20% -0.10%
17:30 USD Crude Oil Inventories 10.4M
22:00 NZD Official Cash Rate 2.50% 2.50%
NZD RBNZ Rate Statement
NZD RBNZ Monetary Policy Statement
22:05 NZD RBNZ Press Conference
10-Mar 01:50 JPY PPI y/y -3.40% -3.10%
02:00 AUD MI Inflation Expectations 3.60%
02:01 GBP RICS House Price Balance 52% 49%
03:30 CNY CPI y/y 1.80% 1.80%
CNY PPI y/y -4.90% -5.30%
08:30 EUR French Final Non-Farm Payrolls q/q 0.20% 0.20%
09:00 EUR German Trade Balance 19.2B 19.4B
09:45 EUR French Industrial Production m/m 0.80% -1.60%
11:00 EUR Italian Quarterly Unemployment Rate 11.50% 11.70%
14:45 EUR Minimum Bid Rate 0.05% 0.05%
15:30 CAD NHPI m/m 0.20% 0.10%
CAD Capacity Utilization Rate 81.90% 82.00%
EUR ECB Press Conference
USD Unemployment Claims 272K 278K
20:01 USD 30-y Bond Auction 2.50|2.1
21:00 USD Federal Budget Balance -198.3B 55.2B
23:15 CAD BOC Gov Poloz Speaks
23:30 NZD Business NZ Manufacturing Index 57.9
23:45 NZD FPI m/m 2.00%
11-Mar 01:50 JPY BSI Manufacturing Index 4.2 3.8
09:00 EUR German Final CPI m/m 0.40% 0.40%
11:00 EUR Italian Industrial Production m/m 0.90% -0.70%
11:30 GBP Trade Balance -10.3B -9.9B
GBP Construction Output m/m -1.30% 1.50%
GBP Consumer Inflation Expectations 2.00%
15:30 CAD Employment Change 10.2K -5.7K
CAD Unemployment Rate 7.20% 7.20%
USD Import Prices m/m -0.70% -1.10%

Time: GMT+2

Currencies/Events to Watch this Week

NZD: NZD: The Reserve Bank of New Zealand will be meeting this week on March 9th. Expectations are that the Central Bank would hold rates steady at 2.50%. This view comes as RBNZ Wheeler had reiterated that low inflation was likely to persist and more recently at a speech, he said that the bank would avoid taking a mechanistic approach to monetary policy. While it could be a close call, the RBNZ is more likely to watch for more economic data before cutting rates at its meeting this week.

JPY: JPY: The final revision to the fourth quarter GDP will be the main event for the Yen. Expectations are unchanged at -0.40%. Ahead of the GDP data, BoJ’s Kuroda is due to speak early on Monday which could be a key risk for the Yen. On Friday the BoJ Governor said that the Central Bank wasn’t considering cutting interest rates further at this point in time. The Yen had mildly strengthened on his comments as speculation eased that the BoJ could act in March. However, in his comments, Kuroda said that the Central bank would act if needed. The early comments on Monday are likely to see some volatility in the Yen ahead of the GDP data due for release, later on, Tuesday.

EUR: The ECB’s big meeting looms on March 10th which comes after the final revised quarterly GDP numbers due on Tuesday. Expectations are for the GDP to remain unchanged at 0.30% for the fourth quarter of 2015. The ECB’s meeting and press conference will be closely watching as Mario Draghi and team haven’t left any clear signals on what the central bank will decide. On Friday rumors floated that there was no consensus among the ECB members, except to cut deposit rates. While nothing has been confirmed yet, the uncertainty in the decision is likely to see a stronger impact on the Euro.

GBP: The week ahead for the GBP is quiet with the exception of manufacturing and industrial production. Estimates point to a possible recovery in manufacturing production and industrial production forecasted to rise 0.20% and 0.60% respectively, following sharp declines previously. The British Pound ignored a weak set of data last week and surged ahead just a week after posting strong losses. It is more likely that the British Pound will continue to focus on the Brexit issues than any economic releases for the time being.

CAD: The week ahead will see two main events affecting the Canadian dollar. First off, the Bank of Canada is expected to meet on 9th March. The BoC is expected to hold rates steady at 0.50% with Oil prices rebounding strongly and previous inflation numbers coming out modestly better than expected including the monthly GDP data which showed an increase of 0.20%. Following the BoC’s decision, Friday will see the release of the February Canadian jobs numbers. Canadian unemployment rate is expected to remain unchanged at 7.20% while the monthly jobs are expected to rise 10.2k for the month in February.

USD: Data from the US this week is soft with no major releases in sight. A few Fed members are expected to speak over the week which is the only key risk to the Greenback. Following Monday’s Fed speak, the remainder of the day will see the Fed blackout period as the Central bank is due to meet the week after, leaving the stage for the Euro and the ECB this coming week.

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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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