Technical Bias: Bullish
- Wednesday: Germany CPI; US Q1 GDP; FOMC Wraps up 2-day policy meetings.
- Thursday: Eurozone CPI; US personal income and outlays.
The EURUSD ended on a high note after a choppy week of trade that eventually saw the US dollar weaken across the board. Significant price action is expected in the final stretch of April, as investors set their sights on a deluge of US and Eurozone data.
The EURUSD was trading at 1.0863 ahead of Monday’s Sydney session.
Key Data Releases:
Markit Group will report on US services PMI for April. The flash services PMI is forecast to rise to 59.6 from 58.6 in March.
Markit said last week that US manufacturing PMI weakened more than forecast in April, with production volumes rising at the slowest rate in four months.
The Conference Board will release its closely followed consumer confidence index, a gauge of consumer sentiment toward personal finances and the economy. The April reading is forecast to show a slight increase to 101.6 from 101.3 in March.
The economic calendar heats up in the middle of the week, as the European Commission reports on several indicators, including consumer confidence, business climate, industrial confidence and service sentiment.
Separately, Germany will release preliminary CPI figures for April, including the harmonized index of consumer prices. Germany’s CPI rate rose 0.5 percent in March. A decline of 0.1 percent month-on-month is expected for April.
In the United States, the Commerce Department will report on Q1 GDP. US gross domestic product is forecast to rise just 1 percent annually in the first quarter following a 2.2 percent increase in Q4.
The Federal Open Market Committee (FOMC) also wraps up its two-day policy meetings on Wednesday. While the Federal Reserve is not expected to adjust interest the rate statement and accompanying press conference could give further clues about policymakers’ outlook.
Germany will release March retail sales figures in the latter half of the week. German retail sales are forecast to rise 0.5 percent in March following a 0.5 percent decline the previous month. Separately, the German government will report on April unemployment. Germany’s unemployment rate is forecast to remain at 6.4 percent in April.
The European Commission will also report on April CPI. The Eurozone’s annual CPI rate is forecast to improve to zero from -0.1 percent in March.
In the United States, the Commerce Department will release personal income and outlays for March. Personal income from all sources is forecast to rise 0.2 percent, while personal spending expected to edge up 0.4 percent.
The Institute for Supply Management (ISM) will release a more closely followed indicator of manufacturing activity. The ISM manufacturing PMI survey for April is forecast to rise to 52.0 from 51.5.
Separately, the government will report on construction spending for March. The dollar value of new construction is expected to rise 0.4 percent in March after dipping 0.1 percent.
Factors to Consider:
- The US dollar has traded in lockstep with oil prices over the past several weeks. Brent and West Texas Intermediate touched new 2015 highs last week, with Brent rising for the third consecutive week.
- Greece headlines will continue to pressure the euro, as finance ministers remain far apart on securing another life line to the cash strapped Greek government.
- Weak economic data could add to existing sentiment that the dollar is overbought. Disappointing Q1 data are reminding investors that the Federal Reserve will take its time normalizing monetary policy.