Forex - Weekly outlook: 04.09 - 04.13
Investors will be closely watching trade related developments in the coming week after renewed jitters over trade tensions between the U.S. and China sent the dollar sliding on Friday.
Friday’s Chinese trade data will be in the spotlight with traders watching to see if recent strong gains in exports continued in March.
Wednesday’s U.S. inflation data will also be closely watched after the latest employment report showed that pace of jobs growth slowed last month, even as wage growth picked up slightly.
The dollar fell against a basket of the other major currencies on Friday as fresh fears over the prospect of a trade war between the world’s two largest economies weighed and a mixed U.S. jobs report did little to alter the monetary policy outlook.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.33% to 89.82 in late trade.
The dollar slid after China said it was prepared to hit back “forcefully” if U.S. President Donald Trump followed through on a threat to impose $100 billion in additional tariffs on imports.
Worries that protectionist trade policies might result in a full blown trade war have fueled fears over the impact on the global economy and U.S. growth.
The dollar had already come under pressure earlier after the Labor Department reported that the U.S. economy added the fewest jobs in six months in March as poor weather dampened hiring. However wage growth picked up slightly, indicating that the labor market is continuing to tighten.
The employment report left the outlook for monetary policy little changed. The Federal Reserve raised interest rates last month and forecast two more rate hikes this year.
The dollar was lower against the yen, with USD/JPY down 0.42% to 106.93 in late trade. The Japanese yen, typically viewed as a safe-haven currency, tends to be sought out by investors during times of political or economic uncertainty.
The dollar was also lower against the traditional safe haven Swiss franc, with USD/CHF losing 0.49% to trade at 0.9589.
The euro pushed higher against the softer greenback, with EUR/USD rising 0.33% to 1.2281.
Sterling was the strongest gainer among the major currencies, with GBP/USD advancing 0.61% to 1.4087.
The pound has strengthened since Britain last month agreed terms with the European Union for a Brexit transition deal and the Bank of England indicated that interest rates will rise in the coming months.
The pound was also higher against the euro, with EUR/GBP down 0.31% to 0.8714 late Friday.
The UK is to release data on industrial and manufacturing output this week and the European Central Bank is to publish the minutes of its March meeting on Wednesday.
The Fed is also to publish the minutes of its March meeting on Wednesday which will be closely watched for any fresh insights on the pace of U.S. monetary tightening.
Monday, April 9
The UK is to release industry data on house price inflation.
The Bank of Canada is to publish its business outlook survey.
Tuesday, April 10
Australia is to publish a report on business confidence.
Canada is to produce data on building permits.
The U.S. is to report on producer price inflation.
Wednesday, April 11
China is to publish data on consumer and producer price inflation.
The UK is to release figures on industrial and manufacturing output and trade.
ECB President Mario Draghi is to speak at an event in Frankfurt.
The U.S. is to produce data on consumer inflation.
The Fed is to publish the minutes of its March meeting.
Thursday, April 12
Bank of Japan Governor Haruhiko Kuroda is to speak at an event in Tokyo.
The ECB is to publish the minutes of its March Meeting.
Canada is to report on new house price inflation.
The U.S. is to publish the weekly report on initial jobless claims.Bank of England Governor Mark Carney is to speak at an event in Toronto.
Friday, April 13
China is to publish trade figures.
The U.S. is to round up the week with a report on consumer sentiment.