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Economic calendar: US retail sales and more to watch this week

Summary:

  • US retail sales report is going to show a bounce in March following the two lacklustre months in a row
  • A package of the UK data may drive the pound ahead of the BoE rate decision
  • Bank of Canada is set to leave rates unchanged, the CAD could continue rising anyway as NAFTA-related risks seem to recede

The past two weeks were dominated by geopolitics - notably the Trade Wars and Syria. This may continue for a while but investors also need to pay attention to a present flow of economic reports. This flow will intensify this week with important reports from UK and US while the CAD traders will await the BoC decision. However, before we move to present the full timetable for the remainder of the week let’s focus on Monday. The sole reading of note is US retail sales which should come in at 0.4% mom and 0.2% mom in terms of a core gauge. If the data meets market expectations it would end a streak of the latest disappointments. On the other hand, do notice that another disappointment could depress the buck as it could result in truly sluggish growth during the first quarter.

What to watch beyond Monday?

The Bank of Canada decision (Wednesday, 3pm GMT), report (3:30) and conference (4:15): The Canadian dollar has been the strongest G10 currency so far in April and there’ve been some go reasons for it. The CAD underperformed in Q1 as trade concerns depressed North American currencies. However, as NAFTA talks progressed and domestic data improved, suddenly the CAD returned to favour. The BoC could provide another opportunity as expectations are fairly low. Markets have pencilled in an interest rate hike but only for the third quarter so unless there’s some major shift in rhetoric to the downside (which does not seem to be warranted), the meeting could surprise to the upside. Affected markets: USDCAD, EURCAD.

UK data: inflation and labour market (Wednesday, 9:30am GMT) and sales (Thursday, 9:30am GMT): British pound has been one of the biggest movers among the main FX. One factor pushing the currency higher is a looming interest rate increase which may take place as soon as May. Therefore, investors want to get all the confirmations from the data. We have three important releases: inflation (PPI on Tuesday and CPI on Wednesday), labour market (Wednesday) and retail sales (Thursday). Although labour market has been holding up well, fortifying ground for a hike, business surveys have deteriorated so we will see if that has any impact on the hard data this month. Affected markets: GBPUSD, UK100.

US data: retail sales (Monday, 1:30pm GMT), housing starts (Tuesday, 1:30pm GMT): With the inflation pick-up in March coming in line with expectations and the FOMC minutes revealing the willingness to adjust rates as needed all the dollar needs is a solid flow of data. Two major updates come early this week, especially the report on retail sales and the the housing starts on Tuesday. Of course, the US currency will still be affected by geopolitics but solid data must be there if the US dollar bulls dream of attacking again. Affected markets: EURUSD, US30.

Central bank speakers scheduled to speak today:

  • 9:10 am BST - BoJ’s Amamiya
  • 5:00 pm BST - Fed’s Kashkari, Kaplan
  • 6:15 pm BST - Fed’s Bostic

link do file download linkThe GBPUSD appears to be already geared up for a bounce to the upside as the price managed to stay above its local demand zone. If the price moves through 1.4280 bulls could hope for an increase even toward 1.4600. Source: xStation5

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