Economic Analysis

The US economy continues to show signs of recovery, but the Fed nullified any expectations of a quantitative easing cut in the near future, saying the economy needs continued support. PMIs in Europe and the UK showed improvement in March.

Services PMIs for Germany and the Eurozone were slightly higher than expected, with readings of 51.5 and 49.6 respectively. For Germany, this was the first time services had shown growth in six months - the 50 line separating growth from contraction.

In the UK, the PMIs for March indicated strong economic growth. Services PMI improved to 56.3, up from 49.5. This was in expansionary territory, above the 50 level. Construction PMI jumped to 61.7, up from 53.3. This showed the strongest growth rate in construction production since September 2014.

In Canada, job creation picked up in March, with gains of 303.1K, surpassing the estimate of 101.5K. The unemployment rate fell to 7.5%, down from 8.2% previously.

In the US, JOLTS jobs rose to 7.37 million, up from 6.92 million and well above expectations of 6.91 million. However, unemployment claims rose unexpectedly, from 719K to 744K, which is much higher than the estimate of 682K. The FOMC minutes indicated that the central bank remains concerned about the strength of the US economy and will continue its quantitative easing program in order to support economic growth.

U.S. dollar

US Inflation Report: Tuesday. The CPI will be closely watched, but is not expected to show much change in April. Headline inflation is expected at 0.5% and core reading at 0.2%.

Australian dollar

AIG Services Index: Sunday. The index jumped to 51.4 in October, up sharply from 36.2 previously. It was the first reading in expansionary territory (over 50) since November 2018. Will we see another positive reading in November?

ANZ job announcements: Monday. The index continues to strengthen, improving to 9.4% in October. Will the rally continue in the November issue?

Business Trust NAB: Tuesday. The National Australia Bank index rebounded in October with a reading of 5, ending a series of three consecutive falls. We are now waiting for the November data.

Westpac Consumer Confidence: Wednesday. Consumer confidence slowed to 2.5% in November, down sharply from 11.9% previously. Investors are hoping for another reading in positive territory.

MI inflation forecast: Thursday. The Melbourne Institute version is a useful gauge of actual levels of inflation. The index rose to 3.5% in October, up from 3.4% previously. Will it continue to rise in the November reading?

Canadian dollar

BOC Business Outlook Questionnaire: Monday. This highly respected survey looks at a wide range of business conditions, including spending and employment expectations. It should be treated as a market mover.

ADP Non-Farm Employment Change: Thursday. This report showed sharp job losses of -100.8k in February. Will we see an improvement in March?

Housing starts: Friday. Housing starts fell to 246,000 in February, down from 282,000. Analysts are forecasting a rebound in March, with expectations of 254K.

Wholesale sales: Friday. Wholesale sales jumped 4.0% in January, its best month since July. A decline is expected in February, with a estimate of -0.5%.

Sterling pound

BRC Retail Sales Monitor: Monday. The Retail Sales Monitor from the British Retail Consortium rose by 9.5% in February. The recovery is expected to continue into March, with an estimate of 11.9%.

GDP: Tuesday. Monthly GDP is expected to show a gain of 0.5% for February, after reading -2.9% previously.

Industrial production: Tuesday. The index fell 2.3% in January, its first decline in nine months. A rebound is expected in February, with a consensus of 0.5%.

Bank of England credit conditions survey: Thursday. The Bank of England's quarterly report details lending terms, and investors will be interested in the bank's view of the economy as health restrictions continue to be lifted. The survey provides forecasts for the next three months.

CB Leading Index: Thursday. The index, which is based on 7 economic indicators, fell 0.4% in January. Will we see an improvement in the next reading?