Last week, prices in the US rose to 8.5% y/y in March, the highest read since 1981, according to the Labor Department. The core reading, excluding food and energy prices, hit 6.5% for the same period. Those figures also pulled down equity prices on the potential threat of a more aggressive response from the Federal Reserve. The benchmark S&P 500 index shifted lower in the days following.
In the currency markets the US Dollar prevailed in the majors’ economies. The conflict in Ukraine is still going on with no clear indication from either side for reconciliation. Russia and Ukraine will remain the area of focus in the week ahead.
Next week, we will have a busy week especially on Wednesday and Thursday. The most important economic data for next week will be:
On Monday UK, Australia and most of EU countries markets will be closed in observance of Easter Monday. In China the quarterly GDP.
On Wednesday, inflation figures will draw plenty of interest, with a further pickup in inflationary pressures supporting another BoC rate hike. Also, later the US will release its Existing Home Sales.
Thursday the New Zealand’s quarterly CPI and the US Philly Fed Manufacturing Index and Unemployment Claims will be released
At the end of the week, prelim April private sector PMIs for France, Germany, and the Eurozone will be the key stats. While the headline numbers will influence, expect inflation, new orders, and supply chain updates to draw plenty of attention.
Major Currencies Performance and Signals
EUR/USD
The Euro continues to go down but there is a significant amount of support at 1.08. This week we are Neutral as a bounce back is expected.
FORECAST: NEUTRAL
Resistance: 1.0850, 1.0900, 1.0950
Support: 1.0800, 1.0750, 1.0700
GBP/USD
The British pound made a rebound last week, and we expect this to continue through the next week. Retail sales and private sector PMIs, due out on Friday, will be the key stats of the week. Expect the retail sales and services sector PMI to have the most influence.
FORECAST: BUY
Resistance: 1.3100, 1.3150, 1.3200
Support: 1.3050, 1.3000, 1.2950
AUD/USD
While there are no stats, the RBA meeting minutes will influence. The minutes are due on Tuesday. Last week the Aussie has been going down and we remain Neutral for this week.
FORECAST: NEUTRAL
Resistance: 0.7400, 0.7450, 0.7500
Support: 0.7350, 0.7300, 0.7250
USD/JPY
The USDJPY pair has risen a lot last week and we expect this trend to continue next week. Industrial production will draw attention on Tuesday ahead of trade data on Wednesday. On Friday, inflation and private sector PMIs will also draw interest.
FORECAST: BUY
Resistance: 126.50, 127.00, 127.50
Support: 126.00, 125.50, 125.00
USD/CAD
The Loonie last week has been ranging. On Wednesday, inflation figures will draw plenty of interest, with a further pickup in inflationary pressures supporting another BoC rate hike. On Friday, retail sales will also influence. We remain Neutral this week.
FORECAST: NEUTRAL
Resistance: 1.2650, 1.2700, 1.2750
Support: 1.2500, 1.2550, 1.2500
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