Forex – The Week Ahead from Finer Capital

This week we will see a Federal Reserve rate decision, a U.S. jobs report and another round of U.S.-China trade talks on tap.

It is widely expected that The Fed is expected to keep interest rates on hold at the outcome of its two-day meeting on Wednesday. At its March meeting the Fed indicated that it will hold off from hiking rates for the rest of the year amid expectations for a slower pace of economic growth.

The meeting is coming after Friday’s data showing that growth the U.S. economy unexpectedly accelerated in the first quarter. However, the expansion was boosted by gains in trade and inventories, which may unwind.

Friday’s non-farm payrolls report for April tops the list of data releases this week with economists expecting a gain of 181,00 jobs, while the unemployment rate is forecast to hold steady at 3.8%

Elsewhere, the Bank of England also looks likely to leave monetary policy unchanged after its meeting on Thursday, as Brexit drags on.

Other economic data on the docket the week include U.S. personal income and spending figures on Monday, as well as ISM manufacturing and non-manufacturing PMIs and a look at consumer confidence.

A new round of China-U.S. trade talks is due get under way in Beijing on Wednesday, with investors still awaiting some sign that the world’s two largest economies are getting close to a deal to end their almost 10-month long trade war..

Recent U.S. data has been supportive of USD and reinforced the belief that the United States is on a firmer economic footing than other leading economies.

“There were plenty of positive headlines for the U.S. economy this week, with GDP growth accelerating in the first quarter, durable goods orders surging in March, and the S&P 500 hitting a record high,” Michael Pearce, senior U.S. economist at Capital Economics, said in a note.

“But signs of underlying weakness abound which, together with the renewed softness of core inflation, will keep the Fed sounding extremely dovish,” said Pearce.

The Euro, which is hovering near its weakest level against the dollar since May 2017 amid worries about the strength of the euro zone economy, was up 0.22% at $1.1153.

GBP was up 0.14% on Friday, ended the week down 0.57%, amid growing concern about stagnant Brexit talks.


The week ahead:

Monday, April 29EU consumer inflation expectations US core price index (March)US personal income and spending (March)

Tuesday, April 30 China manufacturing and non-manufacturing PMIs (April)Euro zone prelim GDP (Q1)Canada GDP (Q1)Chicago PMI (April)CB consumer confidence (April)Pending home sales (March)

Wednesday, May 1 UK manufacturing PMI (April)ADP non-farm payrolls (April)ISM manufacturing (April)Federal Reserve rate decision and press conference

Thursday, May 2 China Caixin manufacturing PMI (April)UK construction PMI (April)Bank of England rate decision, Initial jobless claims, Factory orders (March)

Friday, May 3 UK services PMI (April)Euro zone CPI flash estimate (April)U.S. Non-farm Payrolls (April) ISM non-manufacturing PMI (April)

Reuters contributed to this report