Forex Weekly Outlook: Services PMIs, Fed minutes dominate light data calendar

The US recovery continues to gain traction, while the eurozone has been struggling, hampered by a sluggish vaccine rollout. 

German CPI dipped to 0.5% in March, matching the forecast. This was down from 0.7% a month earlier. Eurozone CPI slowed slightly in March. Headline inflation slowed from 1.4% to 1.3%, while Core CPI dropped from 1.1% to 0.9%.

Manufacturing remains a bright spot, with PMIs showing growth throughout the eurozone with readings above the 50-level. Germany looked very strong, with a reading of 66.6.

UK GDP for Q4 of 2020 was revised to 1.3%, up from the initial reading of 1.0%. Manufacturing PMI rose to 58.9 in March, its best showing since February 2011.

Canada’s GDP accelerated to 0.7% in January, up from 0.1% and above the estimate of 0.5%. The Raw Materials Price Index remains high, improving from 5.7% to 6.6%.

In the US, Conference Board Consumer Confidence soared to 109.7 in March, up from a revised reading of 90.4. It was the sharpest one-month gain in almost 18 years.

US Pending Home Sales posted a second straight decline in March. The decline of 10.6% was much sharper than the estimate of -3.1%.  The week wrapped up with excellent nonfarm payroll numbers, which came in at 916 thousand. This was up from 379 thousand and crushed the estimate of 652 thousand.

  1. US ISM Services PMI: Monday, 14:00. The services sector continues to show strong growth. The PMI came in at 55.3 in February and is expected to rise to 58.3 in March.
  2. UK Services PMI: Wednesday, 8:30. The Services PMI showed growth in March for the first time in 5 months, accelerating from 49.5 to 56.8. A reading above 50 indicates growth. The final reading is expected to confirm the initial release.
  3. Federal Reserve Minutes: Wednesday, 18:00. The minutes will provide details of the March policy meeting. Investors will be listening carefully to see if the Fed members are concerned over inflation or the rout in the bond markets. 
  4. UK Construction PMI: Thursday, 8:30. The PMI improved to 53.3 in March, up from 49.2 beforehand. The final reading should confirm the initial release.
  5. Canada Employment Report: Friday, 12:30. After an impressive gain of 259.2 thousand new jobs in February, job creation is expected to slow to 90.0 thousand in March. The unemployment rate is expected to fall from 8.2% to 8.0%.

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