Major Events of Last Week

TradeOpus Financial Review
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The most important monthly event on the global economic calendar occurred last Friday when the USA published its early anticipated labor report for March. A solid performance boosted investor confidence after recovering wages and increasing employment accentuated the resilience and strength of the US economy. Nevertheless, these promising results are still not expected to budge the current cautious stance of the US Federal Reserve which is presently focusing its attention on the faltering global economic growth as opposed to the improving domestic GDP. The leading US indices rallied last Friday typified by the Dow Jones Industrial Average climbing almost 122 points; the S&P500 inching higher by 11 points and the NASDAQ rising by nearly 39 points.

The US Department of Labor released vital data late last week demonstrating that US employers had created 215,000 new jobs during March compared to the predicted value of 210,000. Details revealed that the US employment rate rose from its previous reading of 4.9% to 5.0% this time around. However, economists concluded that this increase was a positive feature since it verified that more Americans are now incited to rejoin the national labor force after acquiring sufficient confidence in the strength of the US economy.

This report was also particularly impressive since it empathically demonstrated that the US labor market was successively suppressing the adverse impacts of a slowing world economy, a sturdy US Dollar and declining oil prices. One of the most encouraging features of this document was that it disclosed that wages had rebounded last month after slumping during February. Specifically, the average hourly earnings grew by 0.3% last month helping annual earnings increase from its prior reading of 2.2% to 2.3%. The significance of this factor is very important as wage growth between 3.0% and 3.5% is required in order for inflation to hit the 2.0% designated target of the US Federal Reserve.

Still, this solid labor data is unlikely to influence US monetary policies, especially in the short-term. This is because the Fed is now emphatically advising that it plans to concentrate on global developments as opposed to domestic ones. Janet Yellen, the Fed Chairperson, stressed this point in a speech that she delivered last Tuesday when she advised that deteriorating oil prices and faltering global growth pose sizeable downward risks to US economy. She added that under such circumstances, the US Central Bank is well advised to advance cautiously when devising its future guidance policies. The Fed has already started to adopt such an approach last month when it revised its growth forecasts lower and reduced the number of predicted interest rate hikes during 2016 from four to just two.

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What to Expect This Week

The Reserve Bank of Australia (RBA) will announce its latest interest rate decision and forward guidance policies late Monday. Although, the RBA is expected to keep its rates unchanged, economists will still be keen to learn if it intends to retain its current hawkish stance. If so, then the Australian Dollar should receive a boost.

On Tuesday, the Eurozone will disclose a spate of key inflationary indicators for March which should all record states of expansion by producing results above the critical 50 mark. Failure to do so could provide the European Central Bank (ECB) with additional incentive to contemplate the introduction of further stimulus within the near future. Great Britain will then reveal its Purchasing Managers Index (PMI) for its critical servicing sector which should extend its gains for the second consecutive month. Later, the USA will publish its International Trade figure for last month. Investors are hoping that this primary indicator can rebound from its prior disappointing print of -$45.7 billion. Japan will close the session by posting its own PMI for March which is forecasted to report expansion by hovering about its 51.0 level.

The pivotal event of the week will occur during Wednesday afternoon, EST, when the US Federal Reserve releases the minutes from its latest Federal Open Market Committee (FOMC) meeting. This document should contain vital insights into why the Fed decided to adopt such a dovish posture last month.

On Thursday, the USA will issue its ‘Jobless Claims’ figure for the previous week ending 3rd April. Again, the number of Americans filing new claims for unemployment benefit should reside within the long-standing ‘250k – 280k’ range.

Canada will terminate the week by delivering its Labor Report for March on Friday. Expert consensus is currently favoring a loss of 2,300 jobs during this period compared to the number of new posts created in February.


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