Weekly Review for 02-06.05.2016
The decisions of the central banks of New Zealand, USA and Japan last week caused the decline in the USD, especially in the pair with Euro and Yen. Due to the facts that the US Fed left interest rate unchanged at the level of 0.5%, US Fed comments did not show any indications of possible interest rate increase in June, the US statistics of the end of last week was negative, the price of gold went up last week. At the end of Friday’s session the price of gold has reached 1299.00 USD, which was the new high since January 2015.
USD Index WSJ, which evaluates USD’s dynamics against the basket of the other 16 major currencies, fell to the lowest level since May 2015 last Friday.
The pair USD/JPY has reached 18-month lows at the level of 106.35 due to the Bank of Japan decision not to change monetary policy.
Euro has supported by the data showing economic growth and decline in unemployment rate in Eurozone. The pair EUR/USD, which has been growing last week, has reached the level of 1.1460, closely approaching the level of 1.1485 (October 2015).
This week, investors’ attention will be focused on NFPR, which is usually released on the first Friday of the month. A month ago the index showed 215 000 new jobs. If NFPR data for April is weak, market expectations of the interest rate increase in the USA in June will drop, and the USD will go down. Since February the USD has been in the downtrend against major currencies.
Important economic statistics of this week is as follows:
16:00 (GMT+2) – speech of the ECB president Mario Draghi on future monetary policy in Eurozone. Earlier in April ECB left interest rate and asset repurchase program unchanged. At the press-conference Mario Draghi said that the rates would either remain at the current level or would be lowered for a long time period, even after termination of QE.
16:00 – ISM business activity index in the US manufacturing sector and gradual acceleration of inflation in April.
06:30 – Interest rate decisions by RBA. In the following up comments the Bank will assess the effect of the current interest rate on the economic growth and inflation in the country. The Bank will also indicate its plans for future monetary policy. The Bank is unlikely to change interest rate; however, it may announce possibility of the decline in rate and further monetary policy easing in the near future. If the rate is decline at the meeting, the AUD will fall in the market.
18:30 – Speech by Stephen Poloz, the Bank of Canada president.
22:30 – American Petroleum Institute report on oil and petroleum products inventories for last week.
10:00 – Markit business activity indices in the service and manufacturing sectors of Eurozone for April.
14:15 – Employment rate in the USA in April (ADP employment report). Usually this data has strong influence on the market and the price of the USD, as it provides an idea of what to expect from Non-Farm Payrolls, which will be released on Friday. In case of the positive data the USD will grow up. It is expected that the number of jobs in the US private sector will fall by 5000 (195 000 against 200 000 in March). If the forecast turns out to be correct, the USD will fall.
14:30 – US trade balance for March.
15:45 – Business activity index (Markit Economics PMI for April). This index assesses the state of sales and employment and evaluates development of the entire service sector.
16:00 - Business activity index (ISM PMI in the service sector for April).
16:00 – The level of industrial orders in the USA for March. This index evaluates growth in manufacturing sector of the US economy.
16:30 – Changes in the US inventories of oil and petroleum products, as per US Department of Energy.
03:30 – Australian data on trade balance, retail sales and sales on new homes for March.
02:30 – monetary policy comments by RBA.
14:30 – US labor market data for April, including Non-Farm PayRolls for April (forecast: +200 000 new jobs against +215 000 in March), and US unemployment rate (forecast of 5% against in the preceding month).
Investors are waiting for the US data on Friday, as it will open ground for making predictions of the interest rate increase in the USA. Positive data will give hope for the rise in the USD and the increase in the interest rate in the near future. Negative data will trigger the decline in the USD in the financial market.