After the very rich economic calendar in the forex market yesterday, today there are also several important economic data to be released related to the Euro, US Dollar, Australian Dollar, Canadian Dollar and the British Pound. In UK there are Local Elections, which will give an indication of the current vote of confidence for the government related to issues such as the Brexit negotiations and developments.
Key economic events in the forex market for today to focus on:
European Session
- UK: Local Elections, Markit/CIPS Services PMI, Russia: Markit Manufacturing PMI, Spain: Consumer Confidence, Norway: Norges Bank Interest Rate Decision, Εurozone: Inflation Rate YoY Flash, Core Inflation YoY Flash, ECB Constancio Speech, ECB Coeure Speech, Switzerland: SNB Chair Jordan Speech
Time: 00:00 GMT, 06:00 GMT, 08:00 GMT, 08:30 GMT, 09:00 GMT, 12:00 GMT, 12:30 GMT, 16:00 GMT
The Euro after the release of the GDP Growth Rate and the Unemployment Rate yesterday turns its focus on the Inflation Rate in the Eurozone for today. “The consumer price inflation in the Euro Area came in at 1.3 percent year-on-year in March 2018, slightly below the preliminary estimate of 1.4 percent and compared with 1.1 percent reported in the previous month. “, Source: Trading Economics.
The following chart shows the Inflation Rate in the Euro Area for the past 12-months. The Low/High range for the Inflation Rate has been 1.1%-1.9%, with the latest figure at 1.3% being close to the low range indicating not any inflationary pressures in the Euro Area for now. As higher than expected or increasing Inflation Rate is considered positive for the Euro, increasing the probabilities of future interest rate hikes by the ECB, the current Inflation Rate trend is supportive of the ECB decision to keep the key interest rate unchanged during 2018.
The forecast is for an unchanged Inflation Rate year-over-Year at 1.3%, but an increase for the Core Inflation Rate Year-over-Year at 1.2%, higher than the previous figure of 1%. If the market places more weight on the Core Inflation Rate, then this could provide support for the Euro. Also, higher than expected Consumer Confidence in Spain may provide support for the Euro, as it can lead to increased local consumer spending, contributing to higher economic growth overall in the Euro Area.
The Central Bank in Norway, Norges Bank is expected to keep the key interest rate unchanged at 0.5% which should have a neutral effect for the Norwegian Krone. In UK the Markit/CIPS Services PMI is expected to increase at the level of 53.5, higher than the previous level of 51.7. This increase will indicate expansion in the Services Sector, which is considered both positive and supportive for the British Pound.
American Session
- Canada: Balance of Trade, US: Balance of Trade, Markit Services PMI Final, Markit Composite PMI Final, ISM Non-Manufacturing Employment, ISM Non-Manufacturing PMI, Factory Orders
Time: 12:30 GMT, 13:45 GMT, 14:00 GMT
Higher than expected figures and a trade surplus for the Balance of Trade are considered positive for the local economies of US and Canada. A trade surplus reflects capital inflows and increased demand for goods and services denominated in local currency, which in economic theory should lead to the natural appreciation of the currency versus other currencies over time. Both mentioned economies have trade deficits though, and the forecast is for a trade deficit of -2.1Billion Canadian Dollars, lower than the previous figure of -2.69Billion Canadian Dollars, and for the US a trade deficit of -57.8 Billion US Dollars, higher than the previous figure of -57.6Billion US Dollars. The expected move for the Canadian Dollar should be an appreciation as a lower negative figure implies improvement for the trade deficit, while for the US Dollar a depreciation.
For the US Dollar the forecast for the ISM Non-Manufacturing PMI, which measures the overall economic condition for the non-manufacturing sector is a decline and a figure of 58.3, lower than the previous figure of 58.8, which may weigh negatively on the currency. The chart shows “The ISM Non-Manufacturing PMI index for the United States fell to 58.8 in March of 2018 from 59.5 in February and compared to market forecasts of 59”, Source: Trading Economics. There was a slowdown in economic and business activity, and in 2018 the current trend though very short-term is a downtrend, reflecting a slowdown in the growth for the non-manufacturing sector, which is considered negative for the US economy the US Dollar.
Lower Factory Orders are expected, another negative fundamental factor for the US economy, but an increase for both the Markit Composite PMI and the Markit Services PMI Final is expected, which should provide support for the US Dollar, reflecting expansion in the services sector and the manufacturing sector. Overall some mixed economic data is expected for the US Dollar, which should witness increased volatility.
Pacific Session
- Australia: Balance of Trade, Building Permits
Time: 01:30 GMT
A higher than expected trade surplus for the Balance of Trade in Australia and increased Building Permits are considered positive and supportive for the Australian Dollar, reflecting capital inflows, and a strong housing market, a leading indicator of the broader economy. The forecast is for a figure of 0.75Billion Australian Dollars for the trade surplus, lower than the previous figure of 0.825Billion Australian Dollars, and a significant monthly increase for the Building Permits, a figure of 9% is expected versus the previous reading of -6.2%. These figures should provide support for the Australian Dollar.
