NFP To Set The Tone This Week

In the first quarter of 2018, the greenback was able to regain some lost ground. The question by traders now is if the USD recovery is going to last or if it is just a correction. Important data will be released in the first week of Q2 including the NFP (Non-Farm Payrolls) report.

Monday, April 2: China Imposes Additional Tariffs on U.S. Products

The second largest economy in the world yesterday revealed additional tariffs on 128 products from the U.S. This announcement was made by the Chinese Ministry of Commerce (MOFCOM) which stated that it will suspend its obligation to the WTO to reduce tariffs on 120 products from the U.S. The ministry added that it is a “legitimate action adopted under WTO rules to safeguard China’s interests.”

Starting today, tariffs on 120 products such as almonds, cherries and more will be increased by 15% with eight other products to get a raise of 25%.

GBP

The British pound has so far performed excellently today, with no apparent catalyst for its rise.

CAD

The Loonie has started the week excellently, with the oil prices going up. CAD/JPY is up by 10 pips or +0.12% and currently trades at 82.46; CAD/CHF is also up by 12 pips or +0.16%, standing at 0.7401; and EUR/CAD has plunged by 6 pips or -0.04% to 1.5879.

CNY

The People’s Bank of China (PBoC) has earlier today announced that it has lifted the official Chinese Yuan mid-point, putting it at 6.2764 per dollar. This is the strongest reading for the currency since its devaluation three years ago.

In the first quarter of the year, the Yuan recorded its best quarterly performance against the US Dollars, with traders siding with CNY in the midst of the current war trade with the U.S.

Forex Events for the Week

ISM Manufacturing PMI: Monday, 14:00.

The figures from the manufacturing industry will give traders a hint at what is to come on Friday when the Non-Farm Payrolls (NFP) report will be released. The ISM indicator reached 60.8 points in February, with the expected figure for March to drop to 60.1

Australian rate decision: Tuesday, 4:30.

This is an important event as the Reserve Bank of Australia hasn’t changed its rates since 2016. It is however expected that the interest rate will remain at 1.50%. The market predicts no rate hikes in Australia this year.

Lael Brainard talks: Tuesday, 18:30.

Traders will pay attention to the Fed Governor’s speech as any hawkish comments from her will indicate that the Federal Reserve will likely adopt four hikes this year. Her words carry a lot of weight since she is a permanent voter and rarely speaks.

Euro-zone inflation: Wednesday, 9:00.

The first inflation readings for the Eurozone for March is expected to rise. The CPI is expected to increase from 1.1% to 1.4% y/y while the core CPI will make a small leap from 1% to 1.1%. Expectations might have been lowered though after figures in Germany came out below expectation.

ADP Non-Farm Payrolls: Wednesday, 12:15.

This is the biggest hint to the NFP even though the relationship between the pair isn’t always clear. The ADP recorded a very strong job gain of 235K for February, though it is expected to drop to 206K for March.

ISM Non-Manufacturing PMI: Wednesday, 14:00.

This data achieved a high of 59.5 points in February and a slight drop to 59.2 points is slated for March.

US Non-Farm Payrolls: Friday, 12:30.

Regarded as the biggest indicator in the forex market, the NFP has started the year very strong. It, however, slipped in February, with the wage growth decreasing by 2.6%. However, it is expected to surge to 2.8% for March. M/M increase is slated at 0.3% compared to the 0.1% recorded in February.

Top line Job growth, however, is expected to drop to 190K after the massive 313K recorded in February. The unemployment rate which stands at a low of 4.1% is estimated to have gone lower to 4%.

Mark Carney talks Friday, 15:15.

BOE Governor, Mark Carney will give a speech at the International Climate Risk Conference which has been organized for supervisors, with climate change the topic to be discussed. Any speech about British economy will likely move the pound.

Jerome Powell talks Friday, 17:30.

The last event of the week belongs to the Fed Chair Jerome Powell, who will make a speech in Chicago. He will be able to respond to the NFP reports which will be released prior to the talk. His talk will be centered on the economic outlook, with monetary policy likely to be discussed.