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FX Week Ahead: FOMC minutes, US nonfarm payrolls

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The week ahead is marked by a fresh trading week for the markets and with it comes a fresh set of economic data. Standing out among a host of economic releases will be the Fed’s FOMC meeting minutes from the March meeting and the payrolls report for the month of March. Elsewhere, PMI figures from the Eurozone and the UK will be dominating the headlines. Here’s a quick guide to this week’s key economic events.

Japan Tankan surveys expected to rise for the second consecutive quarter

The Bank of Japan will be releasing the quarterly Tankan manufacturing and non-manufacturing survey details. Economists polled are forecasting the manufacturing index to rise to 14, from 10 in the fourth quarter of 2016, while the non-manufacturing index is forecast to rise to 19, from 18 that was registered in the previous quarter of 2016.

The quarterly tankan surveys will offer traders insights into the large manufacturers who remained optimistic in December with most of the optimism stemming from Donald Trump’s election victory.

However, things haven’t been so rosy since January as the U.S. has increased the stakes on countries including Japan for artificially keeping the exchange rate lower to gain a competitive edge. As a result, there is a possibility for a pullback in the Tankan surveys.

FOMC meeting minutes and Nonfarm payrolls

A busy week for the U.S. data over the week will most certainly shape the expectations for the timing of the next rate hike. Data will include the monthly manufacturing and non-manufacturing PMI surveys from Markit and ISM.

The ISM manufacturing PMI is expected to show a modest reading of 57.2, which is slight below February’s print of 57.7. The non-manufacturing PMI also expected to be slightly lower at 57.1, down from February’s 57.6

The FOMC meeting minutes are due mid-week, and the report is expected to shed light on the Fed member’s thinking behind the rate hike in March. The meeting minutes could also offer traders insights into what to look for from the economy to ascertain when the next rate hike could come.

The data will culminate with Friday’s nonfarm payrolls report which is expected to be another solid month for U.S. jobs. The U.S. unemployment rate is expected to remain unchanged at 4.7% although the focus will be on the wage data which is most likely to influence the market sentiment on the next rate hike.

Economists polled are expecting to see a headline print of 200k jobs for the month of February, which will keep the average payrolls gains above the 180k mark.

RBA expected to keep the cash rate unchanged

The Reserve Bank of Australia will be holding its monetary policy meeting this week. No major changes are expected as the central bank is widely believed to keep the cash rate unchanged at 1.5%. The RBA last cut interest rates in August 2016.

There hasn’t been much of economic data being released since the last RBA meeting in March, and therefore this week’s meeting is likely to be a non-event. However, the central bank could be seen focusing on factors such as the labour market, which as of the data for March showed that the Australian unemployment rate increased to 5.9% from 5.7% previously in February.

Besides the RBA’s meeting, the central bank governor, Lowe is expected to speak shortly after the interest rate statement, which is due on Tuesday. Retail sales figures are due on Monday and economists are expecting a headline reading of 0.3% while building approvals are widely expected to show a decline of 1.4%.

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