Can the Greenback Continue Rising with NFP in Sight?

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Greenback Looks to Continue Recent rise as NFP Comes Up

As the bond yields moved higher last week, the Greenback extended its gains against most of its major competitors. Can this continue? This week is packed with lots of events including the all-important Fed decision and Non-Farm Payrolls. Here are some of the events slated for the rest of the week.

Monday, April 30: Positive U.S. Data, Global Concerns Extend Dollar’s Rally

USD

The US Dollars performed excellently during trading sessions Monday with the demand for the currency increasing due to positive U.S. reports and concerns over the sustainability of other major economies’ recoveries

EUR/USD recorded a session high of 1.2107 before dipping back to 1.2077, USD/JPY also dipped to 109.08 before rising to finish at 109.32, and USD/CHF rose to trade at 0.9910.

NZD

The Kiwi started the day poorly and continued that trend against most of its major competitors.

NZD/USD fell from 0.7044 to end the day trading at .7038, NZD/JPY also dropped to trade at 76.91, and GBP/NZD went up from 1.9493 to trade at 1.9569.

Forex Events of the Week

Australian rate decision: Tuesday, 4:30.

The RBA is expected to leave the interest rate at its current level, at 1.50%. The rates haven’t been changed by the Reserve Bank of Australia since 2016 and that trend looks to continue.

Canadian GDP: Tuesday, 12:30.

Known for publishing its GDP reports monthly, the economy of Canada shrank by 0.1% in January and experts now expect a rebound for February, with 0.3% on the cards. A slow growth in the first quarter of the year is expected by the Bank of Canada, with 1.3% expected according to their latest forecasts.

US ISM Manufacturing PMI: Tuesday, 14:00.

Purchasing managers’ index had earlier indicated that the manufacturing sector of the U.S is doing pretty well. In March, the 59.3 points recorded was way above the 50-point threshold that separates expansion from contraction. It is however expected to drop to 58.6 for April.

New Zealand jobs report Tuesday, 22:45.

The Job Reports here are published once every quarter, ensuring that the publication is very important. In the last quarter of 2017, a rise by 0.5% in employment was recorded and an increase by 0.6% is expected for the first quarter of this year. The unemployment rate is however forecasted to remain unchanged at a low of 4.5%.

Euro-zone GDP: Wednesday, 9:00.

Growth in this region has slowed down according to Draghi, the ECB President. After some major countries like France and Germany reporting mixed figures, the euro-zone forecast for quarterly growth is expected to be 0.4% q/q, down from the previous 0.6% recorded in the last quarter of 2017. A figure below the 0.4% will likely slow the ECB’s exit from the QE program.

ADP Non-Farm Payrolls: Wednesday, 12:15.

Even though this report doesn’t usually correlate with the official NFP figures slated for two days from now, it is still a very important event for traders. In March, ADP published a gain of 241K private sector positions but it is expected to drop to 194K for April.

Fed Decision: Wednesday, 18:00.

During this event, the Federal Reserve is expected to leave the interest rate unchanged which currently stands between 1.50% and 1.75%. This meeting doesn’t include any press conference by the Fed or any new forecasts. A rate hike in June is still likely to happen and Powell and his colleagues might likely drop a hint about that.

UK Services PMI: Thursday, 8:30.

The service sector is the largest in the UK, just as it is in most developed countries and the Markit’s forward-looking index significantly affects the price of the pound. In March, the figure dipped to 51.7 points which pointed to a major slowdown in the sector. It is expected to rebound back to 53.3 points for April.

Euro-zone inflation: Thursday, 9:00.

In March, the headline inflation stood at 1.3% y/y and it is expected to stay the same during the preliminary read for April. Core inflation, on the other hand, is expected to drop from 1% to 0.9%. This will most likely affect the euro and leads to a slowdown of ECB’s exit from bond-buying.

ISM Non-Manufacturing PMI: Thursday, 14:00.

This report is a big hint towards Friday’s big event. In March, the figure was a very robust 58.8 points which pointed to solid growth in the sector. It is however expected to drop to 58.1 points for April.

US Non-Farm Payrolls: Friday, 12:30.

This is the Non-Farm Payroll job report of the world’s leading economy and it always causes major reactions in the financial markets. In March, the headline figure recorded a modest increase of 103K, which is way below the 200K average level. For April, a bounce to 185K is expected. The focus of the report will still be on wages. Month over month, an increase of 0.2% is expected while the y/y is expected to stay at 2.7%. Any increase towards 3% will lead to the Greenback surging higher while a deceleration towards 2.5% will lead to the USD to recording some losses.

The jobs report in the world’s No. 1 economy always stirs financial markets. In March, the headline figure disappointed with a modest gain of 103K, well below expectations and the average 200K levels but it came after a big gain beforehand.

 

 

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