Weekly trading forecast April 1 - 4.

The second quarter of 2019 starts at the same time as the first trading week of April. Two months before the summer vacation season - April and May - were traditionally crucial months for the whole year in a decade, and this spring is not going to be an exception. Several geopolitical stories are getting closer to the final decision, investors’ concerns on global economic growth continue weighing on major assets in the financial markets. Cyclical economic reports across many regions will determine the nearest future for monetary policy of major central banks across the globe. Emerging markets will be affected by the second largest economy as China reports several key figures this week. The single European currency is on the way of losing the ground versus its major peers, especially the US dollar. EU data is supposed to show how deep the current fundamental pessimism is. ECB will publish last meeting minutes. The Reserve Bank of Australia will kick off the series of central banks’ meeting this month with its rate decision and economic statement. Of course, the king of all macroeconomic reports - US Non-Farm Payrolls - will drive the market at the end of the week.


Monday, April 1.

Chinese Manufacturing and Non-Manufacturing PMI reports will be published on Sunday, so weekend gaps are possible, especially for the Chinese Yuan versus the US dollar. The Brexit story is one of the main risk factors not only for the British Pound in particular but also European equities in general, so weekend gaps are possible from that side of things as well. Australian Manufacturing PMI, AIG Manufacturing Index, New Home Sales and NAB Business Survey will drive the price action for Aussie early Monday. Chinese Caixin Manufacturing PMI will be also published, so the Asian trading session promises not to be as quiet as some traders would have expected. Swiss Retail Sales and PMI reports will influence the USD/CHF currency pair at the beginning of the European session. Spanish, Italian, French, German and Eurozone manufacturing PMI will have a huge impact on EUR/USD and cross-rates as another round of weak data is forecasted. Eurozone CPI was postponed from the last week and it could also have a sudden impact if the inflationary pressures eased in March. British PMI is on the calendar next but it could be ignored as all eyes are on the Brexit topic in the United Kingdom. US Retail Sales report and ISM Manufacturing PMI will finish an unusually busy Monday.

Tuesday, April 2.

The Reserve Bank of Australia’s meeting, rate decision and economic statement - these are the main events on Tuesday. Although the central bank is widely expected to stay pat on the interest rates, the economic statement should have a huge impact on AUD/USD and AUD/JPY. On one hand, the regulator was extremely dovish last time and it seems like there’s no room for further pessimism. On the other hand, economic reports did not bring lots of optimism recently, so a cautious position might remain on the table. The Aussie traders would react by selling the currency, in most cases, as there is no fundamental and technical reason to go North. Another risk factors are the Chinese data and metals prices, so everything will depend on the price action of different assets. Construction PMI is the only UK report on Tuesday. European PPI and Unemployment figures will be published later. On the other side of the Atlantic, US durable goods orders report should drive US equities bonds and the world’s reserve currency itself.

 Dollar
Source:Bloomberg


Wednesday, April 3.

The price action will be renewed with Australian retail sales and unemployment reports and Chinese Caixin Services PMI in Asia. European traders will watch Italian, French, German and EU Services PMI reports, as well as the Eurozone Retail Sales data, which is expected to slow down further. Therefore, EUR/USD might struggle to recover on that data, if not plunge at all. The Sterling will be influenced by the British Services PMI due to release at 09:00 AM GMT. ADP Non-Farm Employment change will open the US trading session. US Purchase Managers Indexes will be in the market focus for Manufacturing and Non-Manufacturing sectors. US Crude Oil Inventories report will determine the price action for the black gold on Wednesday.

Thursday, April 4.

German Factory orders will be released early Thursday but all eyes will be on ECB meeting minutes. European Central Bank President Mario Draghi was extremely dovish last time, announcing a huge volume of additional liquidity to be injected into the financial system and soft monetary policy to be continued in the European Union this year. The market reacted with the heavy sell-off in all euro pairs. However, some parts of the statement released on Thursday could have an opposite effect in case if some ECB members were against that policy. Canadian Ivey PMI is one of the most crucial reports before the Bank of Canada’s meeting next week, so larger volatility is expected in USD/CAD. US Continuing and Initial Jobless CLaims should not have a significant impact on the greenback, however, equities investors could react sharply.

Friday, April 5.

China and Hong Kong will be off for a national holiday on Friday, so the trading volume could be lowered, especially in the Asian trading session. That’s usually a perfect time for stop-hunters and hedge-funds to move the market so traders should be cautious about leaving trading positions overnight, especially for USD/JPY and other Japanese yen crosses. The volatility will definitely spike in Tokyo as Japan will release several important reports: Household spending, Average Cash Earnings, Coincident Indicator and Leading economic index. German Industrial Production will grab traders’ attention in Europe, while British speculators will watch the Housing sector data. But that all will be completely overshadowed by the main event of the trading week - US Non-Farm Payrolls Report. The headline figure is predicted at the level of 170 thousand jobs added in March compared to the big miss of 20K in February. Some analysts reportedly noticed that it would be a tough task to achieve though as the impact of the government shutdown still weighs on the labour market. It would be also important to watch the unemployment rate, which was revised down to 3.8%. Average Hourly earnings are expected to grow 3.4%, in line with the previous month, but that’s a risk factor as a negative surprise is possible. Anyway, the volatility is guaranteed and the US dollar’s fate will depend on this event. The Canadian employment report is also due to release at the same time as the US NFP, so the most volatile currency pair could be USD/CAD on Friday.

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