30th April to 4th May 2018
Germany, the power house of the European Union is scheduled to release its Retail Sales and HICP. Retail sales is a measure of changes in sales of the German retail sector. HICP is a measure of prices used by Governing Council of EU to define and assess price stability in the euro area as a whole in quantitative terms. In the evening USA will release personal consumption expenditure report which is the favorite measure of inflation by the Federal Reserve and has a different formula than the CPI. The day will end with Pending Home Sales which is a leading indicator of trends of the housing market in the US. It captures residential housing contract activity of existing single-family homes. Some of the markets will be closed today in order to commemorate the Labor Day. From UK we will see Markit Manufacturing PMI which captures business conditions in the manufacturing sector. This will be followed by Mortgage Approvals which presents the number of various Mortgage Approvals. Then the focus shifts to USA with data from US manufacturing sector, which shows the business conditions of this sector. It will be a busy day for traders as the all-important FED decision and Euro zone GDP figures are to be released. The first half belongs to Euro zone with the release of GDP figures of different European countries. The figures will be scrutinized for any hints as Mario Draghi suggested that euro-zone growth has slowed down or “moderated” after some countries reported mixed growth reports. Along with GDP we will also see Markit Manufacturing PMI which captures business conditions in the manufacturing sector and Unemployment Rate which shows the number of unemployed workers divided by the total civilian labor force Before the FED decision we will see ADP Employment Change report which is a measure of the change in the number of employed people in the US. Having just raised interest rates at their last meeting, the Fed has no plans to follow up in May but Fed fund futures show a 93% chance of a quarter point rate hike the following month when economic projections are updated and Jerome Powell holds a press conference. U.S. policymakers have been vocal about their desire to raise interest rates at least 3 times this year and the data improvements since the last policy meeting gives them the confidence to take action in the summer. Central bankers always prefer to minimize volatility on the day that a policy change is made, so if the Fed is serious about a June hike, they will signal their intention at Wednesday's meeting which would send the dollar even higher. Euro Zone Inflation figures will be the key market mover today. The ECB has a “single needle in the compass” – headline inflation. As of March, it stands at 1.3% year on year and is expected to remain unchanged in the preliminary read for April. However, core inflation is projected to drop from 1% to 0.9%. This may weigh on the euro and slow down the ECB’s exit from bond-buying. From US we will see Trade Balance figures which is a balance between exports and imports of total goods and services. We will also get to see Jobs report along with Factory Orders which is measure of the total orders of durable and non-durable goods. The day will end with ISM Non-Manufacturing Index report for the services sector, which is the final hint towards Friday’s big event. The figure remained at a robust 58.8 points score in March, indicating further solid growth. A minor slowdown to 58.1 points is on the cards. The employment component provides further insight into hiring. From Euro Zone we will see Markit PMI and Markit Services which serves as indicators of the economic situation in the Euro Zone services sector. The final half of the day belongs to US with major data releases. The March NFP figures disappointed with a modest gain of 103k but forecast for April is at 185k. However positive Average Hourly Earnings kept the Dollar in contention during March. Yet year over year, the same 2.7% pay raise is on the cards. Any rise towards 3% can send the US Dollar shooting higher while a deceleration towards the stubborn average of 2.5% may weigh on the greenback. The unemployment rate in the U.S. remained at the 17-year low level of 4.1 percent for the sixth month in a row in March. However, the reading for the this month is expected to come at 4.0%.Monday
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