Weekly Outlook: Apr 25 - 29; Fed, BoJ and RBNZ Policy Meetings in Focus!

This week has a pretty crowded economic calendar with a lot of market-driver economic news coming up. Fed, Bank of Japan and RBNZ will have their policy meetings while U.S., UK and Eurozone will release their preliminary GDPs for the first quarter.

[B]Today[/B], early in the morning, the German IFO Survey will publish the Business Climate, Current Assessment, and Expectations for April. Later in the afternoon, the U.S. Home Sales are expected to have increased slightly in March to 0.527M from 0.512M the month before. The Dallas Fed Manufacturing Business Index for April is also scheduled for release.

On [B]Tuesday[/B], all the attention will be turned to U.S., as important economic indicators will be released a day ahead of the conclusion of the Fed two-day policy meeting. The [B]Durable Goods Orders [/B]are expected to have increased by 1.7% in March compared to the month before that dropped by 3.0%.

The flash Markit Services PMI for April will be released as well as the CB Consumer Confidence for April which is forecasted to have slowed down in April. Meanwhile, in Canada the BoC Governor Stephen Poloz will give a press conference.

Later in the day, New Zealand’s Trade figures will be released while overnight, Australia’s inflation rate for the first quarter will be closely eyed. The year-over-year indicator is predicted to show that consumer prices rose by 1.8% the first quarter of 2016 from 1.7% the previous quarter. In Japan, the BoJ Governor Kuroda has a press conference.

On [B]Wednesday[/B], three major banks will have their policy meetings. Federal Reserve and Reserve Bank of New Zealand have their interest rate decisions during the afternoon and overnight, the Bank of Japan. Early in the morning, the German Gfk Consumer Confidence Survey for May will be released. The final UK annual GDP for the first quarter of the year is forecasted to remain at the same level of growth at 2.1% while compared to the quarter before, the consumer prices are expected to rise by 0.4% lower than 0.6% before.

[B]At 18:00 GMT time Fed will announce its interest rate decision [/B]followed from a policy statement half an hour later. No changes to the monetary policy are expected but the traders will hang on every word of the Fed Chair Janet Yellen to get clues how many rate hikes the bank will do this year and when it will be the next one. The market started to get tired on the alternations of views that come out from the Fed policymakers, thus, I would expect a serious effect on the dollar only if a clear statement will be made in either way.

At 21:00 GMT time, the [B]RBNZ interest rate decision[/B] will be announced accompanied with a monetary policy statement. The benchmark interest rate is 2.25% and I wouldn’t expect them to change them for now.

Later in the Asian session attention will be turned to Japan. The National Consumer Price Index for March as well as the Unemployment Rate for the same month are coming out. The flash Industrial Production for March will be also out a few hours before the[B] BoJ monetary policy[/B]. The central bank will announce its interest rate decision and will publish the monetary policy statement.

On [B]Thursday [/B]morning, Germany’s unemployment rate for April will be released. Afterwards, in Eurozone, various sentiment indicators regarding consumers, businesses, services and industries in April will be released.

Going to U.S., the GDP for the first quarter is expected to slow down severely to 0.7% quarter-over-quarter from 1.4% before. There is no market consensus available yet for the year-over-year figure.

The weekly jobless claims will be released as usual as well as the Personal Consumption Expenditures Prices for Q1. The New Zealand’s Building Permits for March and UK’s Gfk Consumer Confidence for April will come out. Overnight, the Bank of Japan outlook report will be released.

On [B]Friday[/B], German Retail Sales for March will be released. In the UK, the Mortgage Approvals for March are expected. In Eurozone, three leading indicators will hog the limelight. March’s unemployment rate will be out, no changes are expected at the record low 10.3% level has been in February. The flash inflation rate for April is expected to show a contraction of -0.1% versus a flat month before. The flash figure of the first quarter’s GDP is predicted to show an expansion of 1.4% versus 1.6% the last quarter of 2015.

In U.S., the Personal Consumption Expenditures and the Personal Spending for March will be released. In Canada, February’s Gross Domestic Product will come out. Later in the day, the U.S. University of Michigan Consumer Sentiment Index for April will be out.

[B]EUR/USD – Technical Outlook[/B]
The [B]EUR/USD[/B] pair has started the week with a slightly positive tone maintaining its gains above the significant support level at 1.1215 ahead of a busy week as the Fed, the RBNZ and the BoJ hold their respective monetary policy meetings. The pair came under pressure the last couple of days and fell more than 1%, following the failed attempt above the critical level of 1.1400, as well as the failed attempts 3 weeks ago above the 1.1454 – 1.1465 zone.

The pair managed to close above the 50-SMA on the daily chart despite numerous failed attempts in the last couple of days and is now attempting to test the key resistance level at 1.1300. It’s worth noting that the pair is moving above the ascending trend line which started back in mid-November 2015, as well as above the 200-day SMA.

Therefore, as long as the bulls hold above these obstacles I would expect to test the critical level at 1.1300. Beyond there would want to take a look at 1.1400 and a break of that would then allow a run towards the 1.1454 – 1.1465 zone. However, I think the level to watch will be the 1.1300 as I think it will be a strong hurdle for the bulls in the next couple of days since it coincides with both the 50-SMA and the 200-SMA on the 4-hour chart. The charts generally look quite positive for the greenback and a return to the downside would see some bids at 1.1230, below which would allow a return to 1.1150 and at 1.1100, around the trend line.

[B]GBP/USD – Technical Outlook[/B]
The [B]GBP/USD[/B] pair rose 3.20% in March, its first monthly gain following four consecutive months of decline, with a strong April rally that appeared to have triggered a considerable amount of short covering alongside a build in bullish longs. UK will publish its GDP figures for the first quarter on Wednesday. UK economy is expected to have expanded by 0.6% qoq in the first three months of 2016.

Technically, there is again very little change, although the 4-hour chart does look a little more positive, following the aggressive rebound from the 1.4300 level, suggesting that we could see a squeeze to the upside in the next couple of days.

However, the pair is now testing a strong technical level at 1.4515, yesterday’s suggested target and March highs. If we see a pullback the bulls should find support around 1.4460 and then at the psychological level of 1.4400. Below the two aforementioned levels, the short-term descending trend line, as well as both the 50-SMA and the 200-SMA on the 4-hour chart, are ready to provide a significant support to the price action. On the other hand, a decisive break above the strong level at 1.4515 should open the way towards 1.4580. All in all, GBP/USD continues to face further upside risk.