Will the Greenback Record Further Gains?

The greenback recorded strong gains in the latter part of last week due to rising US yields. Can the greenback continue higher this week? There are several events slated for the week, including the US and UK GDP, as well as rate decisions from the euro-zone and Japan

Monday, April 23, 2018: Greenback Holds Gains, Comdolls Dip

USD

The USD recorded some gains yesterday, with a few more upbeat medium-tier figures helping the currency.

We sent a signal to buy the USD/JPY on April 19th with the entry price of 107.47. It took 5 days before it finally closed on Monday with profit for our Trade Copier clients, and the maximum possible move was 124 pips.

Comdolls

The commodity currencies didn’t have such a great time yesterday after the lost ground to the Greenback and other competitors from Europe.

Forex Outlook for the Week

Australian inflation: Tuesday, 1:30.

The inflation figures in this country are released only once each quarter, making this report a very important one compared to other countries. In the last quarter of 2017, Australia recorded an increase of 0.6% for headline inflation while the mean CPI went up by 0.4%. For the first quarter of 2018, the headline and Core CPI are expected to rise by 0.5% each.

US New Home Sales: Tuesday, 14:00.

Even though sales of new homes make up only a small part of sales, they usually lead to wider economic activity. In February, it reached an annualized level of 618K, with 625K expected for March.

US CB Consumer Confidence: Tuesday, 14:00.

In March, the CB Consumer Confidence measure stood at a very strong 127.7, but it is expected to drop to 126 points for this month.

Euro-zone rate decision: Thursday, the decision will be released at 11:45 with a press conference at 12:30.

The European Central Bank eliminated all hopes for increasing the volume of bond buys during their last meeting which took place last month. Since then, the economic data in the region has being rather negative, with data such as industrial output and PMI all dropping and missing expectations. In the meeting for this month, the ECB wouldn’t release any new forecasts and might not change its interest rates. The Euro though might be moved by the press conference by Draghi.

US Durable goods orders: Thursday, 12:30.

The headline durable goods went up by 3% in February but it is expected to drop for March. The focus by the Fed is on core orders which went up by 1% after the revised data was released. The figures for March will have a direct impact on the GDP read on Friday. Headline orders are expected to go up by 1.3% while the core order will increase by 0.6%.

Japanese rate decision: Friday morning, press conference usually at 6:30 GMT.

At this meeting, it is expected that the BOJ will leave the policy rate at -0.10% and will decide to continue paying bonds so as to keep the 10-year yield at 0%. Any new surprise by the BOJ will come as a surprise for everyone.

Euro-zone GDP data: Friday: France at 5:30 and Spain at 7:00.

France which is the second largest economy in the region has recorded some growth in the economy, mostly due to the confidence in Macron’s presidency. The final data showed that the economy recorded a 0.7% q/q growth, which is above the average of the eurozone. Spain, the fourth largest in the area recorded some growth last year though the 0.7% growth rate in Q4 wasn’t up to expectation. The weaker growth experienced over the past few months indicate that the two countries will likely see a slightly lower growth rate. The economic growth is expected to grow by 0.4% while Spain might record another 0.7% q/q growth rate.

UK GDP (first read): Friday, 8:30.

In the last quarter of 2017, the British economy enjoyed a 0.4% q/q growth but it is expected to drop to 0.3% q/q for the first quarter of 2018

US GDP (first read): Friday, 12:30.

3% annualized growth was recorded for the Q2, Q3, and Q4 of 2017 but it is expected to be slower for the first quarter of 2018. The economic growth is expected to be around 2% for the first quarter of 2018.