Forex Weekly Outlook – March data likely to be dismal

Analysts are projecting dismal economic data for March, as the Covid-19 virus spread from China and hammered major economies at that time.  Key events such as U.S. and eurozone GDP are expected to point to sharp contractions.

In the UK, the Services PMI plunged in March, dropping to 12.3 points, down from 35.7 a month earlier. On the inflation front, Eurozone CPI came in at 0.7%, while the core reading showed a gain of 1.0 percent. This confirmed the initial readings.

In the U.S., jobless claims dropped to 4.4 million, down from 5.5 million a week earlier. In the past five weeks, new jobless claims have totaled a staggering 26 million, as the Covid-19 crisis has shut down much of the U.S. economy. There was more bad news from March durable goods orders, which plunged by 14.4%, its first decline in four months. The core reading declined by 0.2%, after a decline of 0.6%. The UoM Consumer Sentiment slumped to 71.8, down sharply from 89.1 a month earlier. Still, this beat the estimate of 67.8 points.

1. BoJ Rate Decision: Tuesday, Tentative. The bank is likely to maintain its current monetary policy. Investors will be keeping a close eye on the rate statement.
2. German Preliminary CPI: Wednesday, All Day. Inflation remains very low in the eurozone’s number one economy. CPI came in at just 0.1% in the final reading for March, confirming the initial release. CPI is expected to dip to 0.0% in the upcoming release.
3. U.S. Advance GDP: Wednesday, 12:30. This first read for Q1 GDP is expected to show a sharp decline, with an estimate of -3.9%. In Q4, the economy grew at a rate of 2.1 percent.
4. FOMC Rate Decision: Wednesday, 18:00. The Federal Reserve is expected to maintain the current benchmark rate. Investors will be combing through the rate statement, looking for clues as to future moves that the Fed may make to stimulate the economy.
5. Unemployment Claims: Thursday, 12:30. Jobless claims have shot through the roof, but are expected to drop, with an estimate of 3.5 million.
6. French Flash GDP: Thursday, 5:30. The euro zone’s second-largest economy contracted by 0.1% in the fourth quarter. Economic conditions have deteriorated significantly due to the Covid-19 outbreak and analysts are bracing for a sharp decline of 4.0% in Q1 GDP.
7. Eurozone Flash GDP: Thursday, 9:00. The initial read of GDP tends to have the most significant impact, even though it does not include data from Germany. Back in Q4, the third read confirmed a growth rate of 0.1%. For Q1, the forecast stands at -3.7 percent.  A decline in this range could send the euro sharply lower. 
8. Eurozone Inflation: Thursday, 9:00. CPI came in at 0.7% in the final March reading, as inflation remains well below the ECB target of around 2 percent. The forecast for the initial April reading stands at just 0.1%. The core reading showed a gain of 1.0% in March and the April forecast stands at 0.7 percent.
9. ECB Rate Decision: Thursday, 11:45. The ECB is scrambling to deal with the turmoil in the financial markets due to the corona crisis. The bank has changed some rules in order to maintain banks’ access to its ultra-cheap liquidity. The ECB will also publish fresh forecasts for growth and inflation and may downgrade some of the data points.
10. Canadian GDP: Thursday, 12:30. Canada releases GDP on a monthly basis. Canada’s economy slowed to 0.1% in January, down from 0.3% a month earlier. The downturn is expected to continue in February, with a forecast of 0.0%.
11. U.S. ISM Manufacturing PMI: Friday, 14:00. The index showed little movement in March, with a reading of 49.1 points. However, analysts are braced for a sharp slowdown in the upcoming release, with an estimate of 36.7 points. The 50-level separates contraction from expansion.