Weekly Review
Major news of last week was the minutes of the US Fed meeting in March. The minutes showed that the majority of the FOMC representatives were against the increase in the short-term interest rates in April, while, Janet Yellen supported gradual increase in the interest rates in the USA. The minutes demonstrated that US Fed executives had not reached general opinion on this issue.
At the same time, last Thursday Janet Yellen gave optimistic assessment of the American economy and confirmed that the central bank may increase interest rates.
Last Friday Fed president in Kansas City, Mrs. George said that as long as USA economic performance is positive, delay in the increase of the interest rate may cause “bubbles”.
On the other hand, minutes of the ECB meeting in March shows that ECB governing board did not exclude possibility of declining interest rates in future and introduction of additional incentives measures in order to avoid new economic shocks. Therefore, it is clear that the US Fed and ECB have different monetary policies.
If the banks implement their plans the USD will go up again, while the pair EUR/USD will be under pressure.
Most market participants believe that in June US Fed may increase interest rate, while ECB will continue monetary easing policy in Eurozone.
Next meetings of the US Fed and ECB are on 27 and 21 of April respectively.
Important news scheduled for this week is as follows:
Monday:
В 14:30 and 15:25 (GMT+2), a secretary of Treasury Mr. Jacob Lew and chairman of the US Fed William Dudley will make speeches on the US monetary policy. If they support further interest rate increase, the USD will go up.
Tuesday:
08:00 – German consumer price index for March. It is expected that the index will remain unchanged.
10:30 – British price indices, which are important inflation indices. The decline in the indices will show slow down in inflation, which will have a negative impact on the Pound.
14:30 – US indices of imports and exports.
21:00 – speech of FOMC representative, Mr. Williams.
Wednesday:
14:30 – US retail sales data and producer price index for March. It is expected that that data will be positive, and in this case the USD will strengthen.
16:00 – Interest rate decisions by the Bank of Canada. Changes are not expected. However, pay attention to the accompanying statement of the bank and comments made at the press-conference at 17:15.
16:30 – weekly data on the US oil inventories. The rise of inventories will cause the decline in oil prices.
Thursday:
03:30 – unemployment and employment rates in Australia for March will be released. If the indices are positive the AUD will go up. Usually these indices strongly affect the AUD.
11:00 – consumer price index in Eurozone for March. This is a strong inflation indicator. The decline in the index will give ECB ground to continue monetary policy easing.
13:00 – interest rate decision by the Bank of England. It is expected that the interest rate will remain at the previous level of 0.5%. Market participants will study the minutes of the meeting of the Bank of England in order to see indications of the further monetary policy.
14:30 – US data including unemployment rate for the last week and consumer price index for March. 16:00 – Speech of the US Fed representatives Mr. Lockhart and Mr. Powell.
Friday:
04:00 – important Chinese macro-economic statistics, including GDP for Q1. The decline of the indicator will show continuation of the slowdown of the world economy. It will have a negative impact on the financial market and may cause risk aversion among investors. In this case investors will focus on safe haven assets, such as gold the Yen.
In case of positive Chinese data commodity currencies will go up.
From 14:30 to 22:00 US news will be released, including industrial production data for March and preliminary consumer confidence index for April, as per Reuters/Michigan.
