Action Packed Week ahead for Forex Traders…

by Joe Oliver, Forex Trading-Pips

Action packed week of data ahead for Forex Traders! More on this from BK Asset Management…

Key economic reports are expected from the U.S., Eurozone, China, U.K. and Australia. With so much economic data on the calendar, it will be difficult to tell which ones will have the largest impact on currencies. In the U.S., we have a Federal Reserve monetary policy meeting along with ISM numbers and non-farm payrolls. Considering that the Fed has no reason to act, we don’t expect much from the FOMC statement. Instead, non-farm payrolls will be the number to watch but given that its at the very end of the week, country specific factors rather than risk on / risk off sentiment should drive currency flows for most of the week. In other words, the performance of the dollar could be mixed in the coming days depending upon how Chinese, U.K. and Australian data fare and whether the ECB cuts interest rates.

Yet we fear that the PMI numbers from these countries will show a slower pace of growth in the month of April, which could compound concerns about the sustainability of the global recovery. If we are right, the stall that we are seeing in some of the major currencies and maybe even equities could turn into a more significant reversal. The 4 key events next week will be Chinese manufacturing PMI on Tuesday evening, the FOMC rate decision on Wednesday, ECB rate announcement on Thursday and Friday’s non-farm payrolls report. Despite last month’s abysmal non-farm payrolls number and decline in consumer spending, the Federal Reserve is not expected to alter its stance on monetary policy. Based upon the Beige Book report, there is evidence that the pullback in March did not extend until April and some policymakers share this view. The answer lies in Friday’s non-farm payrolls report. Economists are looking for job growth to rebound from 88K in March to 150K in April. Anything less than 100K will drive the dollar lower, particularly against the Yen. Job growth between 100K to 175K will be a relief for the Fed but probably won’t inspire much optimism in the market. We need to see job growth in excess of 200K for the rally in USD/JPY to resume….More at Forex Outlook – Action Packed Week Ahead

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