Forex - Weekly outlook: April 29 - May 3

Investing.com - The dollar dropped more than 1% against the yen on Friday after the Bank of Japan kept monetary policy unchanged and data showed that the U.S. economy grew less-than-forecast in the first quarter.

The Commerce Department said U.S. gross domestic product expanded by 2.5% in the three months to March, missing expectations for growth of 3.0%.

The disappointing data added to expectations that the Federal Reserve will continue its monetary easing program, amid lingering concerns over the outlook for the U.S. economic recovery.

The BoJ left monetary policy on hold on Friday and indicated that it may take longer than two years to achieve its 2% inflation target, fuelling speculation that the bank may implement additional easing measures later this year.

USD/JPY hit session lows of 97.56 on Friday; the pair’s lowest since April 17, before settling at 98.08, down 1.18% for the day and 1.14% lower for the week.

The dollar rallied to four-year lows against the yen earlier this month after the BoJ unveiled unprecedented monetary easing measures at its April 4 policy meeting, but failed to breach the key psychological 100 per yen level.

The pound extended gains against the dollar in to a second session on Friday, hitting fresh two-month highs after data on Thursday showed that the U.K. economy returned to growth in the first quarter, avoiding a triple-dip recession.

The U.K. economy expanded by 0.3% in the three months to March, above expectations for a 0.1% gain and was 0.6% higher year-on-year.

GBP/USD hit session highs of 1.5498, the pair’s highest since February 19, before settling at 1.5476, 0.28% higher for the day and up 1.16% for the week.

Meanwhile, the euro edged higher against the dollar on Friday, but the single currency looked likely to remain under pressure ahead of the upcoming European Central Bank policy meeting as speculation over a rate cut weighed.

EUR/USD rose to a session high of 1.3048, before settling at 1.3028, up 0.15% for the day, but down 0.21% for the week.

In the week ahead, investors will be awaiting the outcomes of policy meetings by the Federal Reserve and the ECB, as well as Friday’s closely watched report on U.S. nonfarm payrolls.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, April 29

Markets in China and Japan are to remain closed for national holidays.
Germany is to release preliminary data on consumer price inflation, which accounts for the majority of overall inflation.

The U.S. is to produce official data on personal income and expenditure, as well as private sector data on pending home sales, a leading economic indicator.

Tuesday, April 30

Japan is to release official data on household spending, retail sales and preliminary data on industrial production. Markets in China are to remain closed for a national holiday.

New Zealand is to release data on business confidence, a leading indicator of economic health, while Australia is to produce official data on private sector credit.

The euro zone is to release preliminary data on consumer inflation as well as official data on the unemployment rate. The Gfk Institute is to publish a report on German consumer climate, Spain is to release preliminary data on first quarter economic growth and Germany is to produce government data on the change in the number of people unemployed.

The U.K. is to publish official data on net lending to individuals and mortgage approvals.

Canada is to release official data on GDP, the broadest indicator of economic activity and the leading measure of the economy’s health.

Later Tuesday, the U.S. is to release data on consumer confidence, a report on manufacturing activity in Chicago and private sector data on house price inflation.

Wednesday, May 1

Markets in China are to remain closed for a national holiday. Meanwhile, Beijing is to release official data on manufacturing activity, a leading economic indicator.

Japan is to produce official data on average cash earnings.
In Europe, markets in Switzerland, Germany, France and Italy are to remain closed for the Labor Day holiday.

The U.K. is to release data on manufacturing activity, a leading indicator of economic strength.

The U.S. is to release the ADP nonfarm payrolls report on private sector job creation as well as government data on crude oil stockpiles. In addition, the Institute of Supply Management is release data on U.S. manufacturing activity, a leading economic indicator.

In addition, the Federal Reserve is to announce its benchmark interest rate. The announcement is to be accompanied by the bank’s monetary policy statement, which contains valuable insights into economic conditions from the bank’s perspective.

Thursday, May 2

The Bank of Japan is to publish the minutes of its most recent policy setting meeting, which provide investors with important insights into economic conditions from the bank’s point of view.

Australia is to release official data on building approvals and import prices, which contribute to inflation.

Switzerland is to publish its SVME PMI, a leading economic indicator.
The U.K. is to release data on construction sector activity, a leading indicator of economic health.

In the euro zone, Spain and Italy are to release data on manufacturing activity, while France is to hold an auction of 10-year government bonds.

Meanwhile, the ECB is to announce its benchmark interest rate; the announcement is to be followed by a post-policy meeting press conference with President Mario Draghi.

Canada is to publish government data on the trade balance, the difference in value between imports and exports.

The U.S. is to publish the weekly government report on initial jobless claims as well as official data on the trade balance.

Friday, May 3

Markets in Japan are to remain closed for a national holiday.
Australia is to release official data on producer price inflation, a leading indicator of consumer inflation.

The U.K. is to release data on service sector activity, a leading economic indicator.

The European Union is to release its economic forecasts for European Union countries.

The U.S. is to round up the week with government data on nonfarm payrolls and the unemployment rate as well as data on average hourly earnings and factory orders. In addition, the ISM is release data on U.S. service sector activity, a leading economic indicator.