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The coming week is packed with Federal Reserve speakers and updates to economic trends

USD

Once again, the U.S. bonds were the focus last week, along with the FOMC minutes, although the latter did not offer new catalysts to provide a clear direction for the FX market. In contrast, the U.S. 10-year yield dropped a few basis points to 1.65%, well below its recent high of 1.77%, and added hopes for low yield currencies, such as the Japanese Yen. The coming week is packed with Federal Reserve speakers, updates to economic trends in the country, including the Consumer Price Index on Tuesday for March and it could spark a debate over what is driving near-term inflation. Industrial production and retail sales data are expected to show the economy is recovering at a sustained pace midway through the first quarter, while Jobless claims bring updates from the last week. Elsewhere, the U.S. earnings season kicks off, with JPMorgan, Goldman Sachs, Citigroup among others reporting over the week.  Key figures coming up:

  • On Monday (04/12): Federal Budget Balance (Mar)
  • On Tuesday (04/13): OPEC Monthly Report | Consumer Price Index (Mar) | Redbook (Mar) | API Weekly Crude Oil Stock
  • On Wednesday (04/14): Export and Import Price Index (Mar) | Fed Chair Powell Speaks | Beige Book
  •  
  • On Thursday (04/15): Initial Jobless Claims (Weekly) | Retail Sales (Mar) | Industrial Production (Mar) | Manufacturing Production (Mar)
  • On Friday (04/16): Building Permits (Mar) | Housing Starts (Mar) | Michigan Consumer Expectations (Apr) 
  •  

EUR

Last week the EUR/USD pair popped back above its 200-day moving average after several failed attempts in the recent weeks. Market participants priced in some vaccination progress in France and Germany, although setbacks due to AstraZeneca shot limited further EUR’s gains. This week, industrial production for February (on Thursday) is the economic highlight and should confirm the upturn in manufacturing output growth across the region. But, earlier in the week, markets will also see February retail sales, German April ZEW investor surveys. Meanwhile, several European Central Bank members are due to speak, including President Christine Lagarde. Key figures coming up:

  • On Monday (04/12): ECB's Panetta Speaks | Retail Sales (Feb)
  • On Tuesday (04/13): German ZEW Current Conditions (Apr) | ZEW Economic Sentiment (Apr)
  • On Wednesday (04/14): ECB's De Guindos Speaks | Industrial Production (Feb) | ECB President Lagarde Speaks   
  • On Thursday (04/15): German Consumer Price Index (Mar)
  • On Friday (04/16): Eurozone Consumer Price Index (Mar) | Trade Balance (Feb) | Eurogroup Meetings      

GBP

The Pound should benefit from the reopening of non-essential retail and leisure sites, with pubs and restaurants allowed to serve people outside. Moreover, the U.K is close to achieving a herd immunity, as nearly three-quarters of the population already have antibodies against Covid-19. However, the economic data releases through the upcoming week are expected to show the economy struggling during the lockdown, including February industrial production and monthly Feb GDP on Tuesday. In addition, trade balance data will be monitored closely as investors look for clues about the impact of Brexit on EU trade. Key figures coming up:

  • On Monday (04/12): BRC Retail Sales Monitor (Mar)
  • On Tuesday (04/13): GDP (Feb) | Industrial Production (Feb) | Manufacturing Production (Feb) | Trade Balance (Feb)
  • On Wednesday (04/14): Labour Productivity (Q4) | MPC Member Haskel Speaks   
  • On Thursday (04/15): BOE Credit Conditions Survey       
  • On Friday (04/16): Car Registration (Mar) | BoE MPC Member Cunliffe Speaks 

JPY

Over the last week, the Japanese Yen continued to trade tick-for-tick with Treasury yields amid soft domestic economic data which capped further JPY’s gains. The highlight of the week will be Prime Minister Yoshihide Suga’s visit to Washington – the first leader hosted by President Biden. On the economic data, machinery orders on Tuesday will come under scrutiny, in the hope that stronger factory output growth is helping to offset disappointing service sector numbers. In general, the JPY may continue to be exposed to U.S. yields as U.S. data are released. Key figures coming up:

  • On Monday (04/12): Producer Product Price (Mar) | Machine Tool Orders (Feb) 
  • On Tuesday (04/13): Machinery Orders (Feb)
  • On Wednesday (04/14): BoJ Governor Kuroda Speaks   
  • On Thursday (04/15): Reuters Tankan Index (Apr)

CAD

In Canada, the worsening Covid-19 situation across the country is keeping appetite for the Loonie low and markets are inevitably starting to re-assess their recovery expectations for the Canadian economy. Last week, Ontario, Canada's most populous province, initiated a four-week stay-at-home order as it battles a third wave of the virus pandemic. Looking ahead, the Bank of Canada’s outlook survey on Monday could look biased, as the interviews were done before the recent decisions to tighten public health measures. Thus, the survey should have a more limited impact on the FX market. In general, some positive environment for commodity currency may also help the CAD upside. Key figures coming up:

  • On Monday (04/12): BoC Business Outlook Survey  
  • On Thursday (04/15): ADP Nonfarm Employment Change | Manufacturing Sales (Feb)
  • On Friday (04/16): Housing Starts (Mar) | Foreign Securities Purchases (Feb) | Wholesale Sales (Feb)

MXN

Mexico’s Covid-19 numbers keep going up and, according to media reports, the still-low new cases likely reflect inadequate testing and under-detection. The total number of deaths now stands at 205,598, with 2,261,879 confirmed cases, which implies a 9.1% mortality rate. It is a rather quiet week on the economic front, with no material data to be released, except for the job market report on Monday. The lack of fresh figures will leave the Mexican peso exposed to international headlines and domestic political noise. Key figures coming up:

  • On Monday (04/12): Formal Job Creation Total (Mar)
  • On Tuesday (04/13): International Reserves Weekly (USD)

CNY

In China, last week was marked by worries over deteriorating Sino-U.S ties and Sino-EU following the addition of several Chinese supercomputing entities to a U.S. economic blacklist, as well as Italy blocking a Chinese takeover of an unnamed semiconductor company. The week ahead will see updates to economic trends, including trade balance on Tuesday and Q1 GDP rate on Thursday. Chinese GDP growth rate is likely to rise in Q1, given the economic drop seen this time last year due to the Covid-19 pandemic and economy locked down. Also, industrial output and retail sales during the month of March will be the foundation for the Q1 GDP. Key figures coming up:

  • On Monday (04/12): New Loans | M2 Money Stock
  • On Tuesday (04/13): Exports and Imports (Mar) | NBS Press Conference
  • On Wednesday (04/14): Foreign Direct Investment
  • On Thursday (04/15): House Prices (Mar) | GDP (Q1) | Industrial Production (Mar) | Retail Sales (Mar) | Unemployment Rate

BRL

The BRL’s rollercoaster ride continued well in the last week amid imminent populism measures, uncertainties regarding the level of government spending, and worsening virus situation across the country. Data developments over the upcoming week will be focused on economic growth, including retail sales on Tuesday and IBC-Br economic activity on Wednesday. The latter is considered a "preview" of the Gross Domestic Product (GDP) and should show some improvement, but it may have no meaningful effect on the BRL because it does not capture the recent measure restrictions. In addition, the deadlock between the Ministry of Economy and Congress over the adjustments to the 2021 Federal Budget has not yet been resolved, which will continue to weigh on the BRL. Key figures coming up:

  • On Monday (04/12): BCB Focus Market Readout   
  • On Tuesday (04/13): Retail Sales (Feb)
  • On Wednesday (04/14): IBC-Br Economic Activity 
  • On Thursday (04/15): Service Sector Growth (Feb)       

Quick Insights

USD: The U.S. earnings season kicks off with major banks

USD: The U.S. earnings season kicks off with major banks

EUR: Industrial production for February is the week’s economic highlight and should confirm the upturn in manufacturing output growth across the region

EUR: Industrial production for February is the week’s economic highlight and should confirm the upturn in manufacturing output growth across the region

GBP: The Pound should benefit from the reopening of non-essential retail and leisure sites

GBP: The Pound should benefit from the reopening of non-essential retail and leisure sites

JPY: The JPY may continue to be exposed to U.S. yields as U.S. data are released

JPY: The JPY may continue to be exposed to U.S. yields as U.S. data are released

CAD: Some positive environment for commodity currency may also help the CAD upside

CAD: Some positive environment for commodity currency may also help the CAD upside

MXN: The lack of fresh figures will leave the Mexican peso exposed to international headlines and domestic political noise

MXN: The lack of fresh figures will leave the Mexican peso exposed to international headlines and domestic political noise

CNY:The week ahead will see updates to economic trends, including trade balance and Q1 GDP

CNY: The week ahead will see updates to economic trends, including trade balance and Q1 GDP

BRL: The deadlock between the Ministry of Economy and Congress over the adjustments to the 2021 Federal Budget has not yet been resolved

BRL: The deadlock between the Ministry of Economy and Congress over the adjustments to the 2021 Federal Budget has not yet been resolved

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