Forex Weekly Outlook April 6-10
The US dollar had a rough week, making gains in Q1 but erasing them in the wake of Q2, especially towards the end. US ISM Non-Manufacturing PMI, rate decision in Australia, Japan and the UK, FOMC Meeting Minutes, US unemployment claims, Canadian employment data are the major market movers on Forex calendar. Here is an outlook on the highlights of this week.
Initial good figures and end-of-quarter adjustments helped the greenback. However, the US Non-Farm Payrolls missed expectations with a smaller than expected job addition of 126,000 in March, much worse than expected and coupled with downwards revisions. The rise in wages and the drop in the “real unemployment rate” didn’t compensate. While some blame the weather and say it is a one-off, others see the weak economy finally hitting jobs. In the euro-zone, the Greek issues still weigh, while politics also impact the pound. The fall in commodity prices hit the Aussie but the loonie was resilient in the face of the deal with Iran, which could hurt oil prices. What’s next after Easter? Let’s start,
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- US ISM Non-Manufacturing PMI: Monday, 14:00. The US service sector expanded more than expected in February, rising to 56.9 from 56.5 in February. Economists expected a lower reading of 56.5 in February. The New Orders Index posted 56.7, 2.8 points less than January’s 59.5. The Employment Index edged up 4.8 points to 56.4 from 51.6 in January, rising for the 12th consecutive month. The Prices Index increased 4.2 points from the January reading of 45.5 to 49.7. The elevated figures indicate economic conditions are improving. US service sector PMI is expected to reach 56.6 this time.
- Australian rate decision: Tuesday, 4:30. Australia’s central bank maintained its cash rate despite calls for another rate cut. However, implied further easing measures may be introduced in the next policy meeting. The RBA preferred to assess the impact of February’s cut before lowering rates once again. Australian cash rate is predicted to remain at 2.25%, but a cut could also come on the background of falling commodity prices. This is a critical event.
- Japan rate decision: Wednesday. The BOJ maintained its monetary policy in March and continue with its plan to raise monetary base to an annual pace of JPY 80 trillion reaching the Bank’s 2% inflation target. However Haruhiko Kuroda, Bank of Japan governor, admitted for the first time, he could not rule out deflation in the coming months, due to the oil price crush, but assured it won’t necessarily affect the underlying trend in inflation in the long term. The BoJ expects a gradual rise in demand will boost inflation forecasting price rises of 1% in the fiscal year ending in March 2016 and 2.2% for 2017. The BOJ is expected to keep its monetary policy unchanged, but pressure is mounting.
- US FOMC Meeting Minutes: Wednesday, 18:00. In the last meeting, the Fed removed the “patience” wording regarding interest rates and also left some dovish hints, especially with the dot plot. The latter showed slower rate hikes this year. We will now see what members were thinking. A dovish look will enhance the NFP impact, while a hawkish one could leave markets puzzled.
- UK rate decision: Thursday, 11:00. The Bank of England kept its benchmark rate at 0.50% in its March meeting. BoE’s Governor Mark Carney, noted that the next move will be up despite current deflationary pressures. Low inflation may be a blessing in disguise for the UK economy, providing households with greater spending power, in times of sluggish wage growth. Furthermore, cheap imports are also positive for consumers boosting spending and economic growth. The BOE is expected to maintain rates at 0.50%.
- US Unemployment Claims: Thursday, 12:30. The number of new claims filed for unemployment benefits in the US declined considerably last week to 268,000 from 286,000 in the week before. The 20,000 fall reasserts the positive trend in the US labor market. Analysts expected only a minor drop in the number of claims. The number of people continuing to receive jobless benefits declined by 88,000 to 2.33 million. The number of claims is expected to reach 271,000 this week.
- Canadian employment data: Friday, 12:30. Canada’s job market showed signs of weakness amid the global oil slump. Job contraction occurs in crude-rich provinces affecting the overall unemployment rate. The labor market shed 1,000 jobs in February, increasing the jobless rate to 6.8% from 6.6% in January. Analysts expected a job loss of 3,500, but predicted a slower rise of 0.1% in the unemployment rate. The major decline in oil prices also lead the BOC’s decision to cut interest rates in January. Canadian job market is expected to rise by 0.1% while the unemployment rate is forecast to remain at 6.8%.
That’s it for the major events this week. Stay tuned for coverage on specific currencies
*All times are GMT.
Forex Weekly Outlook Apr. 13-17
The US dollar managed to stage a recovery after the previous blows, especially against the majors. A busy week awaits traders with US inflation and consumer data as well as rate decisions in Canada and the euro-zone among other events. Here is an outlook on the highlights of this week.
US data began recovering and the dollar followed. The ISM Non-Manufacturing PMI was OK and JOLTs beat expectations. But it was the meeting minutes that provided the greenback with the biggest push: they revealed that in March, some members talked about hiking in June. Despite the known fact about the existence of hawks and the timing of the meeting before the weak NFP, the greenback soared. It probably remains the cleanest shirt in the dirty pile. Elsewhere, Greek worries weighed on the euro, elections worries hurt the pound and the yen also slid. The Aussie stood out, enjoying yet another “no change” decision by the RBA.
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- Chinese GDP: Wednesday, 2:00. The world’s No. 2 economy has grown at a pace of 7.3% in Q4 2014 and is expected to experience slower growth in Q1. Some say it is inevitable and others say it is wisely engineered by the leadership. Growth in China closely impacts Australia but certainly has implications for the entire world. A slide to 7% y/y is on the cards and as authorities wish to see.
- Euro-zone rate decision: Wednesday, decision at 11:45, press conference at 12:30. In the last meeting by the ECB in early March, Draghi showed determination in implementing the QE program announced in January. Implementation has begun and it is going well. The Bank made it clear that success of the euro-zone in general and particularly regarding inflation depends on full implementation. Will he continue the same determination? If so, the euro would feel the weight. If optimism rises due to the recent signs of growth, we could see the common currency rise. The interest rate is expected to remain unchanged at 0.05% with a negative deposit rate of 0.20%. The latter serves as the lower bar for buying bonds in the QE program
- Canadian rate decision: Wednesday, 14:00. The Bank of Canada left the interest rate unchanged at 0.75% and is expected to do so once again. After the surprise cut in January, Poloz and his team seemed more optimistic about the economy and hinted that this was not the beginning of a new loosening cycle. How will they sound now? Worries about Q1 growth could be echoed in the statement. Note that the release is followed by a press conference at 15:15.
- Australian employment data: Thursday, 2:30. Australia enjoyed job growth in February: 15.6K jobs were added. Also the unemployment rate went in the right direction and dropped to 6.3%. In the bigger scheme of things, unemployment is still on the rise and is likely to rise later on in the year. Very similar number are expected now: a gain of 15.1K jobs and an unemployment rate of 6.3%.
- US housing data: Thursday, 12:30. These figures went in different directions: building permits rose to a promising 1.09 million (annualized) in February, while housing starts stood on 0.90 million. The latter can be blamed on the cold winter weather, while the former is more forward looking. Building permits are expected to stand at 1.08 million (annualized) and housing starts to bounce back to 1.04 million. Note that revisions are quite common here.
- US unemployment claims: Thursday, 12:30. The weekly gauge of jobs did bounce back from the lows but beat expectations by hitting 281K. Perhaps more importantly the moving average fell to levels last seen many years ago at 282K. It was above 300K not too long ago. A small rise to 284K is on the cards.
- US Philly Fed Manufacturing Index: Thursday, 14:00. The regional figure is for the month of April, providing a fresh insight on the manufacturing situation. 4 consecutive misses on expectations set the number on 5 points last time. A small rise is likely: 5.5 points.
- UK employment data: Friday, 8:30. This is the last jobs report before the May elections and carries more political weight. The claimant count change, aka jobless claims, continued dropping quickly in February: 31K. A similar number is probable now – a slide of 28.5K. The unemployment rate is also going in the right direction, and stood on 5.7% in January. A drop to 5.6% is expected. This is what the current conservative coalition government is championing. However, the average earnings index has risen by only 1.8% y/y in January, and this provides fuel for the opposition Labour. A tick down to 1.7% is expected now.
- US CPI: Friday, 12:30. When looking at the headline number, the US is experiencing deflation, but this is clearly oil-related. Year over year core inflation is actually on the rise, reaching 1.7% in February. Both monthly indicators rose 0.2% last time and could follow suit this time, with +0.3% in the headline number and +0.2% in the core figure.
- US Consumer Confidence: Friday, 14:00. The Reuters / University of Michigan consumer confidence survey edged up to 93 points in the final read for March. We now get the preliminary figure for April and a higher score is expected: 93.8 points.
That’s it for the major events this week. Stay tuned for coverage on specific currencies
*All times are GMT.
Forex Weekly Outlook Apr. 20-24
The US dollar had a rough week in which mostly weak economic data hit the greenback. Can hope for a recovery in Q2 help it or are more falls expected? Inflation data in New Zealand and Australia, US Durable Goods Orders and various central bank speeches are the highlights of this week. Here is an outlook on the top events on Forex calendar.
Most US data disappointed with weaker than expected housing and employment data as well as soft retail sales. Jobless claims rose 12,000 to 294K, building permits came reached 1.04 million while forecasted 1.08 million and housing starts hardly recovered with 0.93 million. Retail sales registered a 0.9% increase, below the 1.1% rise predicted and Core sales gained 0.4% far below the 0.7% expected. However, the Philadelphia Fed Manufacturing Index surprised with 7.5 points vs. 5 in the previous months exceeding forecasts for a 6.5 points reading. Will the US data stabilize this week? Let’s start:
- Glenn Stevens speaks: Monday, 17:30. RBA Governor Glenn Stevens is expected to speak in New York. He may refer to The RBA’s decision to leave the cash rate unchanged at 2.25%, despite talks of a rate cut.
- German ZEW Economic Sentiment: Tuesday, 9:00. German investors’ sentiment remained positive in March, climbing for the fifth time to 54.8 from 53 in February amid rising domestic demand. However concerns about Greece and Ukraine clouded future outlook. Analysts expected a higher figure but predict optimism will grow in the coming months after the fog, surrounding Greece and Ukraine, clears. Investors sentiment is expected to rise to 56.
- Australian inflation data: Wednesday, 1:30. Australian inflation in the last quarter of 2014, rose 0.2% following 0.5% rise reported in Q3. The reading was below expectations reflecting lower prices for transport, due to the ongoing decline in oil prices, as well as for healthcare. Falling fuel prices are the main cause for the tame inflation in the fourth quarter. But Core inflation a more precise measure posted a 0.7% gain reaching an annual 2.3% just above the bottom of the RBA’s 2-3% target range. CPI is forecast to gain 0.1%.
- US Existing Home Sales: Wednesday, 14:00. Sales of existing home are the majority of transactions. After slipping to 4.88 million in February, a rise to 5.04 million is on the cards now. The numbers are annualized.
- US Unemployment Claims: Thursday, 12:30. The number of Americans filing initial claims for unemployment aid increased by 12,000 to 294,000, rising for the second straight week. However, the number of jobless workers is still low. The four-week average, edged up by 250 to 282,750, nearly the same as in the prior week. The total number of Americans seeking aid declined to 2.27 million, the lowest in more than 14 years. The number of claims is expected to reach 90,000 this week.
- New Home Sales: Thursday, 14:00. New home sales form the smaller part of transactions, but their initiation triggers a wide variety of economic activity. Here, a slide is expected from the highs of 539K (annualized) seen in February to 514K now.
- Eurogroup Meetings: Friday. The Eurogroup meetings attended by Finance Ministers from the euro area will be crucial for Greece. Unless a funding agreement is reached, Greece will not get the third aid program from the ECB, resulting in a default. Athens has not received bailout aid since August last year and has been hard pressed to cover payments amid a cash crunch, resorting to measures such as borrowing from state entities to tide it over.
- German Ifo Business Climate: Friday, 8:00. German Ifo business climate edged up to 107.9 in March from 106.8 in February, beating forecast for 107.3. Optimism about current conditions rose as well as six months outlook. Strong growth and low oil prices boosted domestic demand. Ifo economists believe expansion will continue in the coming months.
- US Durable Goods Orders: Friday, 12:30. Orders for long lasting goods declined in February by 1.4% contrary to forecast of 0.3% gain. Meanwhile, core orders fell 0.4% posting the fifth straight monthly decline. The weak figures suggest softening in domestic demand despite growth in employment. However, economists expect growth will increase in the coming months.
*All times are GMT.
Forex Weekly Outlook Apr 27-May 1
The US dollar did not get support from the US economy and retreated. A busy week awaits us at the turn of the month: GDP from the UK, the US and Canada and three rate decisions. The Federal Reserve stands out. These are the major events lined up for this week. Join us as we explore the market movers for this week.
US data ran below expectations, with a 1,000 rise in the number of jobless claims, reaching 295,000, Another disappointing release came from the housing market where new U.S. single-family home sales recorded their sharpest fall in more than 1.5 years, down 11.4% to 481,000 units in March. Core durable goods orders were also quite worrying. In the euro-zone, data was unconvincing as well and Greece provided only confusion. The UK is nearing the elections but the data still has its impact and it didn’t look too good. The Aussie was pressured by China and the kiwi by its central bank. Let’s start,
- UK GDP: Tuesday, 8:30. Britain’s recovery lost momentum in the fourth quarter of 2014, expanding 0.5% while posting 0.7% growth in the third quarter. Economists expected the economy would expand 0.6%. The main drop occurred in the construction sector. UK’s service sector gained 0.8% in the last quarter. However, despite the slowdown, 2014 growth was the strongest growth since before the financial crisis with an annual expansion of 2.6%. Economists expect the first quarter growth will reach 0.5%.
- US CB Consumer Confidence: Tuesday, 14:00. U.S. consumer confidence edged up in March to 101.3 from 98.8 in February amid renewed optimism over the labor market. The harsh winter weather and softer global demand, weakened growth early in the first quarter. But consumers continue to be optimistic regarding the labor market. Some analysts believe the soft growth may cause the Fed to delay the planned rate hike. However, positive housing data together with healthy employment reports indicate the US economy is on a growth trend. Consumer sentiment is expected to growth further to 102.6 in April.
- US GDP: Wednesday, 12:30. The US economy slowed more than expected in the fourth quarter of 2014 as government spending declined sharply and business investment halted. Gross domestic product reached an annual rate of 2.2% from a strong 5% rise in the third quarter. Economists expected 3% growth. The economy grew 2.4% in 2014 compared to 2.2% in 2013. Analysts forecast a boost in growth amid the collapse in energy prices increasing consumer spending power. Analysts forecast a 1.1% expansion in the first quarter.
- US rate decision: Thursday, 18:00. The Federal Reserve inched closer to hiking rates in its March meeting, but downgraded its economic growth and forecasts, indicating they’re in no hurry to normalize rate levels. The word “patient” was removed from the central bank’s statement, increasing prospects for a rate hike but at the same time not providing a specific date. Yellen told reporters that a June move could not be ruled out. Analysts do not expect the Fed to raise rates this time. Concerns about the economy will be closely scrutinized.
- NZ rate decision: Wednesday, 21:00. The Reserve Bank of New Zealand left the official cash rate on hold, noting it will not cut rates as did the rest 18 central banks around the world and promised a “period of stability” for up to two years. Reserve Bank governor Graeme Wheeler still voiced his concern about the strength of the dollar and the immediate need to depreciate its value. The Bank projects inflation will remain low for the rest of the year. Rates are expected to remain unchanged, but could repeat the dovish comments heard recently.
- Japan rate decision: Thursday. The Bank of Japan has kept its monetary policy unchanged in its April meeting, even though the two year deadline for its 2.0% inflation target has passed and inflation remained near zero. BoJ governor Haruhiko Kuroda stated inflation expectations are positive despite the temporary fall due to the oil price crush and that the Central bank is on the right track and easing measures will continue as planned. Economists do not expect any policy changes this time.
- Canadian GDP: Thursday, 12:30. Canada’s economy shrank 0.1% in January, following 0.3% gain in December. Economists expected a 0.2% expansion in January. Oil and gas production increased 2.6% as well as oil extraction despite low prices. However, economists believe low oil prices will have a negative effect on inflation and growth, which may compel the central bank to cut another 25 basis points in the near future. Canadian economy is expected to contract 0.2% in February.
- US Unemployment Claims: Thursday, 12:30. The number of Americans filing initial claims for unemployment benefits increased by 1,000 last week to 295,000. Despite expectations for a lower figure of 288,000, the number of firing is near a 15-year low, indicating the recent decline in hiring is only temporary. The four-week average dropped 22,000 to 2.31 million; the lowest level since December 2000. The number of claims is expected to reach 297,000 this week.
- US ISM Manufacturing PMI: Friday, 14:00. US Manufacturing PMI fell in March for the first time in 14 months to 51.5 from 52.9 in February. The reading was below market forecast of 52.5. The employment index declined 1.4 points to 50. Exports contracted more strongly to 47.5 from 48.5. Production expanded, but new orders growth slowed to a reading of 51.8. Manufacturing PMI is expected to rise to 52.1 in April.
*All times are GMT.
Forex Weekly Outlook May 4-8
The US dollar experienced a very turbulent week, tumbling down and recovering, but not against the euro. Close elections in the UK, an important rate decision in Australia, employment data from New Zealand, Australia, Canada and the all- important US non-Farm Payrolls release are key events. These are the highlight events on Forex calendar for this week. Here is an outlook on the top events coming our way.
The Federal Reserve downgraded its economic outlook amid soft growth data. The Fed admitted recent weakness in the first quarter relating it to temporary factors. Inflation will have to climb back to 2% and the job market needs to improve further before a rate hike is announced. However, the Fed believes the US economy will rebound in the second quarter. Meanwhile, jobless claims released last Thursday, surprised markets with a 34,000 fall in the number of claims nut not all data points impressed. The biggest winner was the euro, that broke critical resistance and seems unstoppable. Poor data weighs on the pound towards the elections and central banks weigh on the kiwi and the Aussie.
- Australian rate decision: Tuesday, 4:30. The Reserve Bank of Australia kept its cash rate at 2.25% for the second consecutive month in April, as the majority of policy makers decided against another rate cut. The last rate cut in February was designed to boost growth in non-mining sectors. RBA governor Glenn Stevens notes in his rate statement that further easing measures will be announced in the next few months. No change in rate is expected this time, but there is no 100% consensus. This means that a rate cut will hit the Aussie, and another “no cut” is set to boost it.
- US Trade Balance: Tuesday, 12:30. The U.S. trade deficit narrowed in February to the lowest level since 2009, reaching $35.4 billion. Economists expected deficit will rise to $41.3 billion. However, the strong dollar, weak global demand and lower crude oil prices probably impacted trade balance in February. Despite the low deficit, economic growth slowed considerably in the first quarter. Exports declined 1.6% to $186.2 billion, the smallest since October 2012, while imports from China fell 18.1%, pushing the politically sensitive U.S.-China trade deficit down 21.2 percent to $22.5 billion. Trade deficit is expected to grow to 39.7 billion in March.
- US ISM Non-Manufacturing PMI: Tuesday, 14:00. The U.S. non-manufacturing sector continued to expand at a slower pace in March, as service companies increased their export orders. Economists expected Non-Manufacturing PMI to reach 56.6. The majority of respondents’ were positive about business conditions and the overall economy. The ISM’s new orders index increased to 57.8 in March from 56.7 in February. The export index jumped to 59.0 from 53.0. The ISM business activity index declined to 57.5 from 59.4 in February and 61.5 in January. Non-manufacturing PMI is expected to reach 56.2 in April.
- NZ employment data: Tuesday, 22:45. New Zealand’s employment market expanded 1.2% in the fourth quarter of 2014, compared to 0.8% growth in the previous quarter. Economists expected a 0.8% rise in the number of new positions. Despite the bigger than expected job gain, the unemployment rate increased to 5.7% from 5.4% in the third quarter, posting the highest unemployment rate since Q1 2014. Analysts estimate an average of 5.2% in 2015. New Zealand’s employment is expected to grow by 0.7% in the first quarter, while the unemployment rate is forecasted to decline to 5.5%.
- US ADP Non-Farm Payrolls: Wednesday, 12:15. The U.S. private sector registered the smallest job gain in more than a year, adding 189,000 positions in March. The reading was below market forecast of 227,000 jobs and weaker than the 212,000 increase in posted the previous month. Harsh winter, a strong dollar and weaker global demand were partial causes for the disappointing jobs release. ADP private sector employment is expected to grow by 185,000 in April.
- Janet Yellen speaks: Wednesday, 13:15. Federal Reserve Chair Janet Yellen will speak in Washington DC. She may speak about the recent FOMC rate decision the state of the job market. Market volatility is expected.
- Australian employment data: Thursday, 2:30. Australia’s labor market expanded by 37,000 new jobs in March, pulling the unemployment rate down to 6.1%. The majority of jobs asses were full time positions. Economists expected a lower gain of 14900 positions and forecasted unemployment of 6.3%. Productivity has climbed increasing employers’ demand for workers. Improved job prospects expected to lift household incomes and boost the economy. Australian labor market is forecasted to expand by 3,100 jobs, while the unemployment rate is expected to reach 6.2%.
- US Unemployment Claims: Thursday, 12:30. The number of Americans filing new claims for unemployment fell last week to the lowest level since 2000, indicating the weakness in the labor market during March was only temporary. The number of initial claims plunged 34,000 a seasonally adjusted 262,000, beating forecasts for 290,000 new claims. The four-week moving average declined l 1,250 to 283,750.
- UK elections: Thursday, initial results expected late in the US session. After 5 years of a Conservative-LibDem coalition, incumbent David Cameron boasts an recovering economy while Labour leader Ed Miliband points to deteriorating standards of living. The markets would prefer a Conservative government, the current coalition or at least an outright majority for Labour. However, things look much more complicated, with both leading parties expected to fall short of a majority and a hung parliament also on the cards – an uncertain situation with negative ramifications for the pound. Polls are too close to call, making it an interesting event indeed.
- Canadian employment data: Friday, 12:30. The Canadian economy unexpectedly added 28,700 jobs in March, beating forecasts of jobs contraction. The majority of jobs were part-time positions, but employers also cut 28,200 full-time jobs. The main gain was detected in the service sector. RBA Governor Stephen Poloz stated that first quarter growth will be badly affected by the recent oil price collapse. The labor participation rate edged up to 65.9% from 65.7%. The unemployment rate remained at 6.8% while expected to tick up to 6.9%.
- US Non-Farm Payrolls: Friday, 12:30. US non-farm payrolls disappointed in March showing job growth of 126,000 positions, far below the 246,000 gain expected by analysts and following 295,000 job addition in February. Meanwhile the unemployment rate remained stable at 5.5% in line with market forecast. The employment-population ratio remained at 59.3%, while the participation rate edged down to 62.7% in March from 62.8% in the prior month. US private sector is expected to gain 231,000 jobs, lowering the unemployment rate to 5.4%.
*All times are GMT.
Forex Weekly Outlook May 11-15
Forex markets have seen a turbulent week, in which the USD suffered but managed to partially recover. German GDP, UK Employment data, Mark Carney’s speech and US consumer data stand out. These are the major events on forex calendar. Join us as we explore this week’s highlights.
The Non-Farm Payrolls release showed the U.S. economy created 223,000 jobs in April, rebounding from a poor jobs gain in March. The details of the report are mixed, but there are slightly more positives than negatives. The euro jumped yo highs last seen in February on a short squeeze but retreated. In the UK, the Conservatives won an absolute majority, the best outcome for markets, and the pound jumped on this surprise. The Australian dollar suffered a rate cut but also no further cuts anytime soon and the reaction was positive for AUD/USD. The loonie made some nice gains with oil, but found it hard to maintain them. Let’s start:
- UK rate decision: Monday, 11:00. The Bank of England maintained its benchmark borrowing rate at a record low of 0.50% on April, following weaker than expected inflation. Britain’s economy prospered in 2014 with an annual growth of 3%. Despite a slow start of 2015 growth is expected to pick-up in the coming months and the sudden fall in inflation is mostly associated to the global slump in oil prices. The BoE forecasts a 2% inflation in two years’ time. The Central Bank also kept the 375 billion of government bonds to further boost the UK economy. No change in rates is expected this time.
- Graeme Wheeler speaks: Tuesday, 22:45. RBNZ Governor Graeme Wheeler will hold a press conference in Wellington following the release of the Financial Stability Report. In the last monetary policy meeting Wheeler said uncertainties exist in Europe, China and Australia, although global growth should be boosted by the decline in world oil prices. He also said that New Zealand economy continues to expand at an annual rate of around 3%, supported by low interest rates, high net immigration and construction activity, and the fall in fuel prices.
- German GDP: Wednesday, 6:00. Germany’s economy expanded more than expected in the fourth quarter of 2014. GDP grew by 0.7% thanks to a boost in domestic demand. Analysts expected a lower expansion rate of 0.3%. Europe’s economic leader continued to expand as lower inflation increased demand and wages kept growing at a healthy pace of 2.8% in 2014. Furthermore, since interest rates on deposits were approaching the negative territory, people saw no reason to save. GDP growth is expected to reach 0.5%.
- UK employment data: Wednesday, 8:30. U.K. jobless claims fell to the lowest level in forty years falling 20,700 in March to 772,400, the lowest since 1975. Wage growth is strongly felt due to zero inflation. Household income is expected to be robust in 2015. Annual pay growth excluding bonuses accelerated from 1.6%. In February alone, wages rose 2.2% from a year earlier, following 1.6% in January, the biggest increase since 2011. The number of available jobs edged up to 743,000 in the first quarter, the highest since comparable records began in 2001. The number of Jobless claims is expected to drop 20,100.
- Mark Carney talks: Wednesday, 9:30. BOE Governor Mark Carney will speak in London about the Inflation Report. Carney said policymakers shouldn’t fight the current period of low inflation by inserting stimulus into the economy, since this fall is temporary and related to the oil price crush.
- US Retail sales: Wednesday, 12:30. Retail sales edged up in March for the first time since November rising 0.9% compared to a 0.6% decline in the prior month. Economists expected and even higher rise of 1.1%. Consumers increased purchases of automobiles and other goods, suggesting the slowdown in the first quarter was temporary. Meanwhile, core retail sales, excluding automobiles, increased by a seasonally adjusted 0.4% in March, a bit weaker than the 0.6% forecasted. Analysts expect retail sales to rise 0.3% and core sales to climb 0.4%.
- US PPI: Thursday, 12:30. U.S. producer prices increased in March 0.2% following four months of declines indicating signs of firming in underlying inflation. Analysts forecasted PPI to reach 0.3% after falling 0.5% in February. Energy prices have stabilized, but weak global demand may to keep inflation subdued for a longer period. Due to low inflation levels, most analysts reduced their expectations for a Fed rate hike. Producer prices are predicted to rise 0.1% in April.
- US Unemployment Claims: Thursday, 12:30. The number of Americans filing initial claims for unemployment benefits increased last week by a mere 3,000 last week to 265,000, reaffirming the positive trend in the US labor market. The encouraging employment figures continue to improve despite a temporary decline in growth. Analysts expected claims to reach 277,000. The four-week moving average of claims, fell 4,250 to 279,500, the lowest since May 2000. The number of new unemployment claims is forecasted to reach 271,000.
- US UoM Consumer Sentiment: Friday, 14:00. US consumer confidence edged up in April to 95.9 from 93 after two months of declines. Economists forecasted a minor rise to 93.8. Since growth is expected to increase in the second quarter, Consumer sentiment and consumer spending will follow suit. Consumer sentiment is forecasted to rise further to 96.5 this time.
*All times are GMT
Forex Weekly Outlook May 18-22
The dollar was on the back foot on more worrying signs from the US economy. Inflation data from the UK, the US and Canada, German Economic Sentiment, GDP data from Japan, US FOMC Meeting Minutes, employment and manufacturing data as well as speeches from Mario Draghi, Mark Carney and Haruhiko Kuroda. These are the main events on our calendar. Join us as we explore the big market movers for this week.
Last week, further lukewarm data from the US unsettled markets: Retail sales disappointed with a flat reading after gaining 1.1% in March, missing forecast for a 0.3% rise; Core sales rose a mere 0.1% while anticipated to rise 0.4%. Producer prices declined 0.4% in April after a 0.2% gain in the prior month, while expected to increase 0.1%; Consumer sentiment also disappointed with a sharp drop from 95.9 in April to 88.6 this month, lower than the 95.8 forecast by analysts. However, jobless claims continued to decline reaching 264,000 after posting 265,000 in the prior week. Will the US economy shake off losses in the coming weeks? Let’s start:
- UK inflation data: Tuesday, 8:30. UK Consumer Prices remained at 0% for the second consecutive month in March. A decline in clothing and footwear was offset by a rise in petrol prices. This reading was the lowest since estimates began in the late 1980s. However falling oil prices were the major force behind the low inflation levels. Economists believe inflation will pick-up in the second half of 2015 after oil price pressure subsides. CPI is expected to remain flat in April.
- German ZEW Economic Sentiment: Tuesday, 9:00. German investor sentiment declined unexpectedly in April after six months of gains, caused by rising uncertainty regarding Greece’s debt crisis and its impact on Germany. The ZEW index of investor and analyst expectations declined to 53.3 from 54.8 in March, while economists expected a rise to 55.6. However, despite the fall in sentiment the ECB is convinces that the German economy will continue to strengthen due to the exceptional policy stimulus in Europe. German investor sentiment is expected to fall further to 50.1 this time.
- US Building Permits: Tuesday, 12:30. The number of residential building permits issued in March declined 5.7% from February reaching an annual rate of 1,039,000. Analysts expected a higher figure of 1,080,000. Meanwhile, privately-owned housing starts in were 2.5% lower than in March reaching a seasonally adjusted annual rate of 926,000. The lukewarm figures suggest the economy is struggling to rebound from a weak start of 2015. The number of residential building permits is expected to rise to 1,070,000 in April.
- Stephen Poloz speaks: Tuesday, 15:45. Bank of Canada Governor Stephen Poloz is scheduled to speak in Charlottetown. Poloz may talk about the negative effects from the oil price shock and the prospects of expansion. The Governor may also talk about the possibility of further rate changes in the coming months.
- Japan GDP data: Tuesday, 23:50. Japan rebounded in the fourth quarter of 2014, expanding 0.6%. Although the release was weaker than estimated it showed an annual growth of 2.2%. Exports edged up 0.2% and the weak yen increased foreign demand. Private consumption increased 0.3%, but business spending grew just 0.1%. Economists expected a quarterly growth of 0.9% and an annual growth of 3.7%. Possible downside risk is the expected sales tax due to reach 10% in April 2017. This is why the BOJ is determined to maintain accommodative monetary policy to boost domestic demand and increase growth. Japan’s growth in the first quarter is expected to reach 0.4%.
- US FOMC Meeting Minutes: Wednesday, 18:00. In the most recent meeting in April, the Fed removed forward guidance, opening the door to raising the rates. While they did express some worries about the economy, the statement was perceived as somewhat hawkish, especially on the background of the poor GDP released on the same day. The minutes could reveal more worries and good weigh on the dollar. We have already seen in the past how the minutes took a different approach than the statement.
- US Unemployment Claims: Thursday, 12:30. The number of jobless claims continued to decline this week dropping additional 1000 from last week, reaching 264,0000. The reading was better than forecasted, pushing the average over the past month to the lowest level in 15 years reaffirming the rebound in the US labor market. Fed Chair Janet Yellen closely monitors employment data to determine whether a rate hike is in order. The number of jobless claims is expected to reach 267,000 this week.
- US Philly Fed Manufacturing Index: Thursday, 14:00. The Philadelphia manufacturing index surprised in April by rising to 7.5 points from 5.0 in March. Analysts expected the headline index to reach 6.5 points. New orders fell to 0.7 from the previous reading of 3.9, the lowest reading of new orders since May 2013. Meanwhile, the employment index rose to 11.5 from the March’s reading of 3.9, the highest since November. Inflation declined sharply to -7.5 from March’s reading of -3.0. Other data suggest weakness in the manufacturing sector. The Philadelphia manufacturing index is forecasted to rise further to 8.3 in May.
- Mario Draghi speaks: ECB President Mario Draghi will speak in Sintra-Portugal at the ECB Forum on Central Banking. Policy makers from various countries will attend the ECB Forum and discuss the relationship between inflation and unemployment from a broader perspective as well as its implications for current monetary policy-making globally. He recently dragged the euro lower, but this was only temporary.
- Japan rate decision: Friday. The Bank of Japan decided to continue implementing its present monetary policy despite failing to reach its deadline for the 2% inflation target. BOJ Governor Haruhiko Kuroda said that further easing measures are not necessary, blaming the weak inflation on lower oil prices. However many analysts believe the BOJ will decide to ease policy again in October. Kuroda postponed the inflation target to around April to September 2016 saying trend inflation is improving steadily. Analysts do not expect any changes in Japan’s monetary policy.
- US inflation data: Friday, 12:30. U.S. Consumer Price Index increased 0.2% in March continuing its rise from February, in line with market forecast. The main increase occurred in energy and shelter costs. However, on an annual basis inflation turned negative, falling 0.1%, compared to February’s unchanged reading. Excluding volatile energy and food prices, core inflation also rose 0.2% following February’s 0.2% gain, according to forecasts. On an annual basis, core inflation edged up 1.8%, up from the previous reading of 1.6%. CPI is expected to rise by 0.1% and Core CPI is expected to gain 0.2% in April.
- Mark Carney and Haruhiko Kuroda speak: BOE Governor Mark Carney and BOJ Governor Haruhiko Kuroda will speak in Sintra-Portugal at the ECB Forum on Central Banking. Policy makers from various countries will attend the ECB Forum and discuss the relationship between inflation and unemployment from a broader perspective as well as its implications for current monetary policy-making globally.
*All times are GMT.
Forex Weekly Outlook May 25-29
The US dollar made a comeback and the greenback was a big loser in a week that saw trends change. And now, US Durable Goods Orders, Consumer Confidence as well as UK, Canadian and US GDP data stand out. These are the highlight events in Forex calendar. Here is an outlook on the main market-movers for this week.
The Federal Reserve released minutes from its April 28-29 policy meeting, revealing the planned rate hike will not take place in June. Despite growing confidence in the US economic recovery, the recent data suggest a temporary slowdown. Weaker consumer spending, slow growth and employment data led policy makers to postpone their decision on raising rates. Fed officials were also disappointed that falling oil prices did not spur growth as anticipated and that the recent dollar softness muted inflation. The Fed has reiterated it will not raise rates until it is “reasonably confident” that prices are moving toward its 2% target. Will the US economy rebound from its recent soft patch? In the euro-zone, talk about front-loading QE hit the euro in particular. The common currency reversed its previous gains. In the UK, inflation dipped below 0% and in Japan GDP came out better than expected. Let’s start:
- US Durable Goods Orders: Tuesday, 12:30. The U.S. manufacturing sector rebounded in March amid expansion in the transportation industry. New orders for long-lasting manufactured goods increased by 4.0%, to $240.2 billion, following a 1.4% decline in February. However, core durable goods orders, excluding the volatile transportation sector, declined 0.2% to $159.9 billion. The weak core figure followed seven months of negative readings, indicating the second quarter may not be as strong as forecast. A drop of 0.4% in orders and a gain of 0.5% in core orders is on the cards.
- US CB Consumer Confidence: Tuesday, 14:00. Consumer confidence fell unexpectedly in April to 95.2 from 101.4 in March amid weak job growth. While economists expected sentiment to rise to 102.5, sentiment plunged to the lowest level in 2015. Fuel prices continue to remain below last year’s prices contributing to growth but the soft patch in the US labor market overshadowed this positive development. 95.3 is expected now.
- Canadian rate decision: Wednesday, 14:00. The Bank of Canada kept its overnight rate unchanged at 0.75%. Governor Stephen Poloz forecast a positive outlook for the Canadian economy, despite the current weakness related to the collapse in oil prices. The central bank cut its original 1.5% growth forecast for the first quarter of 2015, to non- growth. However, Poloz insisted the economy would rebound in the second half of the year. Nonetheless, many economists believe the oil prices collapse will have a longer effect on Canadian growth.
- US Unemployment Claims: Thursday, 12:30. The number of Americans filing initial claims for unemployment benefits increased by 10,000 claims last week, reaching 274,000. Analysts expected a smaller rise to 271,000. Despite last week’s increase, the number of claims remained below 300,000 indicating the labor market continues to strengthen for the 11th week. The four-week moving average fell 5,500 last week to 266,250, reaching the lowest level since April 2000. A similar level of 272K is estimated now.
- UK GDP: Thursday, 8:30. According to the preliminary release for Q1 2015, the economy expanded by only 0.3%. The figure will likely be upgraded to 0.4% this time. It’s important to note that this growth rate is lower than seen beforehand.
- Canadian GDP: Friday, 12:30. Canada’s economy stalled in February showing no-growth, after contracting 0.2% in January. The mild improvement in the service sector was offset by contraction in goods-producing industries. Both manufacturing and energy sectors shrank in February suggesting the energy sector is not the sole cause for Canada’s economic weakness, as implied by the Central Bank. Economists believe the BOC will have to cut rates later this year to spur growth. An advance of 0.2% is on the cards now.
- US GDP: Friday, 12:30. According to the first release for Q1, the economy grew at an annual rate of only 0.2%, below expectations. Things are expected to turn even lower, with a downgrade to contraction of around 0.9% this time . Fed Reserve chair, Janet Yellen also discussed the possibility of raising rates if the employment market will show substantial signs of growth.
*All times are GMT.
Forex Weekly Outlook June 8-12
The US dollar had the final word in a turbulent and volatile week. G7 Meetings, a rate decision in New Zealand, employment data in Australia, as well as US retail sales, PPI and Consumer Sentiment stand out. These are the highlight events for this week. Join us as we explore the main market movers.
US Non-Farm Payrolls surprised with an excellent release showing a job gain of 280,000 in May. This was accompanied by a rise in wages widening participation and sent the dollar rallying. Things were more complicated beforehand for the greenback. The euro enjoyed the lack of worries from the ECB about bond volatility and the lack of rush to front load QE. Yet most of the EUR/USD surge was eventually erased. The pound suffered from a poor PMI while the Aussie only partially enjoyed the strong GDP report. What’s next for currencies? We can certainly agree with Draghi about getting used to volatility. Let’s start:
- G7 Meetings: Sun-Mon. finance ministers and central bankers from 7 industrialized nations will meet in Germany to discuss the escalating Greek debt crisis as well as global economy and foreign policy challenges. Russia will not participate in these meeting, but German Chancellor Angela Merkel noted there are many other ways to communicate with the Russian president. For example, the Normandy Format, where Germany and France together with Russia and Ukraine discuss how to resolve the conflict in Ukraine. The IMF will lead the negotiations with Greece instead of a German-dominated negotiating forum.
- Glenn Stevens speaks: Wednesday, 2:50. RBA Governor Glenn Stevens will speak in Melbourne after leaving us with a neutral bias in the last rate decision. Stevens may speak about the slower than expected pace of growth in Australian economy and the weakness in business capital expenditure in both the mining and non-mining sectors. However, the good news is that the Aussie depreciated in the past year, lowering key commodity prices.
- Mark Carney speaks: Wednesday, 20:00. BOE Governor Mark Carney will speak in London. He may have to refer to the embarrassing revelation that the Bank of England is secretly planning for Britain’s exit from the European Union. “Project Bookend” was accidently delivered to an editor at The Guardian newspaper and was also kept from many of the BOE’s stuff. Market volatility is expected.
- New Zealand rate decision: Wednesday, 21:00. The Reserve Bank of New Zealand maintained rates at 3.5% in April, in light of the rising uncertainties in Europe, China and Australia as well as, domestic dependence on accommodative monetary settings. However, the massive decline in world oil prices is expected to boost growth since Crude oil prices are almost 50 percent below their July 2014 level. Inflation remains low but is expected to pick up gradually. The Reserve Bank of New Zealand is expected to maintain rates in June but many expect a cut later this year.
- Australian employment data: Thursday, 1:30. Australia’s unemployment rate in April increased mildly as expected, reaching 6.2%, after a fall of 2,900 positions in April. The unemployment in Australian remains above 6% in the last 11 months indicating sluggish growth in the Australian job market. Full-time employment decreased by 21,900, while part-time employment increased by 19,000. Australian employment market is expected to add 15,200 jobs while the unemployment rate is forecasted to remain at 6.2%.
- US Retail sales: Thursday, 12:30. U.S. retail sales remained flat in April amid reduction in purchases of automobiles, indicating the US economy is struggling to get back on track after sluggish growth in the first quarter. Hopes for a strong rebound in the second quarter are fading in light of this weak release as well as other economic indicators. Retail sales excluding automobiles, inched 0.1%, while expected to rise 0.4%. The lukewarm data suggests the Fed will not hurry to raise rates anytime soon. Analysts expect U.S. retail sales to edge up 1.1% and forecast core sales to rise 0.7%.
- US Unemployment claims: Thursday, 12:30. The number of Americans applying for unemployment benefits declined unexpectedly last week to 276,000, remaining below 300,000 for the 13th week. The four-week average moved up 2,750 to 274,750. The relatively small number of employment seekers indicates improved job security. Economists hope for a solid job gain in May. Job growth remained strong despite temporary setbacks, suggesting employers were not deterred by the slowdown in the first quarter. The number of claims is expected to reach 277,000 this week.
- US PPI: Friday, 12:30. U.S. producer prices resumed their descent in April as energy prices continued to decline. Producer price index fell 0.4%, falling for the third time this year after rising 0.2% in March. In the 12 months through April, producer prices fell 1.3% the biggest decline since 2010. The 0.7% drop in finished goods was the major cause for the decline in the PPI. Economists forecast a 0.4% rose in Producer prices this time.
- US UoM Consumer Sentiment: Friday, 14:00. The University of Michigan’s survey showed Consumer sentiment declined in May to 90.7 from 95.9 in April, the lowest reading since November 2014. Consumers were more concerned about current economic conditions as well as the future. However, the Conference Board, a business group, reported that its index of consumer moral showed mild improvement in May. From 94.3 to 95.4. Nevertheless, The Michigan index is well above last year’s 81.9 indicating a pickup in consumption. Consumer sentiment is expected to grow to 91.3 in June.
*All times are GMT.
Forex Weekly Outlook June 15-19
The US dollar did not lick honey against most currencies despite some OK data. The focus now moves to the all-important Fed decision. In addition we have housing and inflation numbers in the US, rate decisions in Japan and Switzerland and the ongoing Greek crisis. These are among the main events on forex calendar for this week. Here is an outlook on the market movers coming our way.
The released positive economic data with better than expected retail sales figures. American consumers increased their purchases in May, especially for autos, clothes and building materials, suggesting the improvement in the labor market boosted sales. Also consumer sentiment for June beat expectations, but most market analysts doubt this is enough for an early rate. In the euro-zone, Greek headlines had a growing impact on the common currency as the clock is ticking. The Aussie enjoyed a good employment report while the kiwi fell sharply on a rate cut. Where will currencies move next? Let’s start,
- UK Inflation data: Tuesday, 8:30. UK inflation turned negative in April, reaching -0.1%. This was the first negative figure ever recorded. Bank of England governor Mark Carney forecasted low inflation in the coming months, but expects a gradual pick up towards the end of 2015. The sharp fall in oil prices is the major reason for low inflation. However, this global trend is positive for UK households despite concerns of weaker business investments. UK inflation is expected to rebound in May and rise 0.1%.
- German ZEW Economic Sentiment: Tuesday, 9:00. German investor sentiment plunged in May, amid the Greek debacle and lack of growth. Economic sentiment fell to 41.9 from 53.3 in April considerably lower than the 48.8 estimated by analysts. Responders were concerned about the sluggish growth data of only 0.3% growth in the first quarter compared to 0.7% in the last quarter of 2014. Furthermore, Greece’s inevitable default raises fears over the Eurozone economic outlook. German investor climate is expected to decline further to 38.6.
- US Building Permits: Tuesday, 12:30. U.S. building permits edged up to their highest level in nearly 7-1/2 years in April, reaching a seasonally adjusted annual pace of 1.14 million units, following 1.04 million in March. Additional positive construction data suggest a possible rebound in the housing sector. The rise in demand for new houses is a positive trend following the harsh winter of 2015. The strong housing data is expected to have a positive effect on GDP growth in the second quarter. The number of building permits is expected to reach 1.10 million units this time.
- UK Employment data: Wednesday, 8:30. The UK labor market continued to improve in April. Unemployment fell and the number of people employed continued to rise. The number of people claiming jobless benefits declined by 12,600 in April to 764,000. Government officials were pleased with the positive data, claiming their government is working. Rising demand for workers pushed regular pay growth to 2.2%. Weak inflation and higher wages are welcome news for the UK households. This will also have a positive effect on consumer spending and economic growth.
- Fed decision: Wednesday, 18:00, press conference at 18:30. This is the first meeting that does not carry any forward guidance regarding rates. In addition, it is accompanied by fresh economic forecasts, the “dot plot” and of course, a press conference by Fed Chair Janet Yellen, all making this meeting a very big event. The baseline scenario is that the Fed will wait just a bit more before raising the rates, with economists focusing on the September meeting. However, a rate hike is possible already now and in July. On on hand, the Fed would like to start the “lift off” and prevent bubbles. On the other hand, it would not like to act prematurely, choking the recovery and having to reverse. Every word in the statement and every word that Yellen will say carry a lot of weight. Worries could send down the dollar while upbeat sentiment about the positive data in the spring could be dollar positive. A repeat of the “hike in 2015″ stance would be generally positive.
- NZ GDP: Wednesday, 22:45. New Zealand economy expanded 0.8% in the fourth quarter of 2014, in line with market forecast, following a 0.9% growth in the third quarter. Retail and accommodation edged up 2.3% in the last quarter of 2014 while international tourist spending increased by 15%. Retail trade also climbed 1.8%. Year-on-year, the economy grew 3.5%, the highest level since the fourth quarter of 2007. New Zealand Q1 GDP is expected to reach 0.6%.
- Switzerland: rate decision: Thursday, 7:30. The Swiss National Bank decided to keep interest rates at negative 0.75%, waiting to see the full impact of its unexpected move in January. The change in the monetary conditions was made in an effort to depreciate the Swiss franc, but had a negative effect on household savings and pension funds becoming a matter of concern for the Swiss population. SNB President Thomas Jordan noted that the franc was still overvalued and that there was room for an even lower rate in the future. The Swiss National Bank is expected to maintain the negative rate of -0.75%.
- US inflation data: Thursday, 12:30. U.S. inflation excluding energy costs edged up 0.3% in April amid a rise in shelter and medical care costs. Analysts expected a 0.2% climb as in March. Meanwhile, the overall CPI climbed 0.1% after rising 0.2%in March. The rise was held back by a 1.7% decline in gasoline prices and no change in food prices. April’s figures support the Fed’s decision to raise rates, showing signs that inflation was moving toward the Fed’s target. CPI is forecasted to rise 0.5% while Core CPI is expected to gain 0.2%.
- US Unemployment claims: Thursday, 12:30. The number new claims for unemployment benefits increased mildly last week, reaching 279,000, still remaining below 300,000. This was the 14th week that claims held below the 300,000 threshold, indicating the labor market continues to strengthen. Economists expected the number of claims will reach 277,000. The four-week average of claims increased 3,750 to 278,750 last week. The number of jobless claims is forecasted to reach 278,000 this week.
- US Philly Fed Manufacturing Index: Thursday, 14:00. Manufacturing in the Philadelphia area weakened in May, according to responders. Philadelphia Fed’s manufacturing business outlook fell to 6.7 in May from 7.5 in April. New orders rose 0.3% following 0.7. Current shipments index also rise 3 points to a reading of 1 and Employment conditions weakened by 5 points to 6.7, from April’s reading of 11.5. The manufacturing sector in the New York region found some momentum late last week with the Empire State manufacturing survey bouncing back into positive territory. However, the 3.1 reading in May remained weaker than expected. Manufacturing sentiment in the Philadelphia area is expected to rise to 8.1.
- Japan rate decision: Friday. the Bank of Japan voted to maintain its monetary policy stance unchanged in May and continue implementing money market operations to ensure a monetary base of JPY 80 trillion a year. The decision, which was in line with market forecast. The BOJ noted that Japan’s economy is continuing to improve. Exports increased boosting growth in the manufacturing sector and increasing business investments. However, the Bank also stated that inflation is likely to remain close to 0% in the near term due to the energy price decline. No change in rates is expected.
*All times are GMT.
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