Forecasting the Coming Week: The FOMC and NFP take centre stage

The Greenback transited another week where data releases and expectations of interest rate cuts by the Federal Reserve remained at the centre of the debate. On this, the USD Index (DXY) seems to have embarked on a gradual decline after hitting new yearly peaks earlier in the month. This retraction, however, should be deemed temporary.  

It was a negative week for the Greenback, which extended further the rejection from yearly peaks despite the move higher in US yields in response to investors’ re-adjustment of the potential timing of the first interest rate cut by the Fed. The always relevant Consumer Confidence tracked by the Conference Board is due on April 30, along with the FHFA’s House Price Index and the Employment Cost index. On May 1, all the attention will be on the Fed’s interest rate decision, seconded by the ADP Employment Change, the ISM Manufacturing PMI, Construction Spending, and the final S&P Global Manufacturing PMI. In addition, Initial Jobless Claims are due on May 2, ahead of Factory Orders and Balance of Trade results. Closing the week, markets’ focus should shift to non-farm Payrolls, the Unemployment Rate, the final S&P Global Services PMI, and the ISM Services PMI.

EUR/USD clinched its second consecutive week of gains and finally managed to break above the key 1.0700 barrier on the back of improved sentiment in the risk-linked galaxy. The preliminary Inflation Rate in Germany is due on April 29, along with the final Consumer Confidence print in the euro area. On April 30, Retail Sales in Germany, the advanced Q1 GDP Growth Rate, and the labour market report are due, followed by the flash Inflation Rate in the euro bloc. The final HCOB Manufacturing PMI in Germany and the euro region is expected on May 2, seconded by the EMU’s Unemployment Rate on May 3.

Following its risky peers, GBP/USD sharply reversed two consecutive weeks in negative territory, managing to reclaim the area beyond 1.2500. In the UK, Mortgage Approvals and Mortgage Lending are due on April 30, prior to the release of the final S&P Global Manufacturing PMI on May 1. On May 2, the Nationwide Housing Prices will be announced ahead of the final S&P Global Services PMI on May 3.

There seems to have been no respite for the selling pressure in the Japanese yen, which eventually sent USD/JPY to fresh highs at levels just shy of the 157.00 barrier. The Japanese calendar will show the Unemployment Rate on April 30, followed by Industrial Production and Retail Sales. On May 1, comes the Consumer Confidence gauge, while the BoJ Minutes and Foreign Bond Investment are due on May 2.

The better tone in the commodity complex, in combination with the renewed selling stance in the Greenback sponsored a multi-session positive streak in AUD/USD. Data-wise, in Australia, Housing Credit is due on April 30 along with advanced Retail Sales. The final Judo Bank Manufacturing PMI and the Ai Group Industry Index come on May 1, prior to the release of Balance of Trade results and flash Building Permits on May 2. Finally, Home Loans figures, Investment Lending for Homes, and the final Judo Bank Services PMI are due on May 3.

Of note, in addition, will be the publication of Chinese Manufacturing and Non-Manufacturing PMIs tracked by NBS on April 30, ahead of the Caixin gauges on May 6.

Anticipating Economic Perspectives: Voices on the Horizon

• BoC’s Macklem, RBNZ Orr speak on May 1.
• BoC’s Macklem speaks on May 2.
• Fed’s Goolsbee and Williams are due to speak on May 4.

Central Banks: Upcoming Meetings to Shape Monetary Policies

• The FOMC meets on May 1 and is expected to leave rates unchanged.