Week Ahead: China GDP and US Retail Sales on Focus Amongst Trade Optimism

Market Analysis /
Axi Team / 15 Apr 2019
  • China is to release first-quarter growth on Wednesday which is projected to print a 6.3% growth, which is not a slow rate for the world’s second largest country.
  • Eurozone will release Markit’s PMI, which is expected to show recovered Manufacturing and stable service growth.
  • US retail sales number on focus. After a downfall in December and a surge in January, retail sales returned to normal in February, albeit with drops: 0.2% on the headline and 0.4% in core sales. Both figures are projected to increase now: 0.7% on the headline and 0.7% in core sales.
  • Risk-on sentiment may strengthen upon solid China growth number and US retail sales, benefiting commodity currencies and may not favour JPY.

 

Skip to: GBP | EUR | USD | JPY | AUD | NZD | CAD

Don't miss out on the technical analysis setups for the week. Download our report here!

Currency: GBP

Direction: Bearish
Confidence Level: ★★
Analyst: The British pound pushed higher against the greenback as traders were encouraged by the immediate risks around Brexit being pushed back by this week’s delay to the exit date. Sterling was up 0.19% at $1.3077. The delay is buying the U.K. more time for an orderly Brexit. Sadly, it could also mean another six months of uncertainties which could keep investors away. When Theresa sells this plan to the Parliament tonight, the MPs are not likely to welcome it. The GBP could slip as investors start to focus on the downside risks put forward by another six months of uncertainties.

Currency: EUR

Direction: Bullish
Confidence Level: ★★
Analyst: Data from Europe was encouraging, with eurozone industrial output declining by less than expected in February. This week will see the release of Eurozone PMIs. Markit’s forward-looking indices have been flashing red in recent months, with manufacturing PMI falling to contraction territory - below 50 points. The most devastating drop was in Germany, with a score of 44.1 points in March. However, the services sector is doing fairly alright. The focus remains on the German Manufacturing PMI this Thursday which is expected to recover to 45.2 points.

Currency: USD

Direction: Bullish
Confidence Level: 
★★
Analyst: 
The U.S. dollar slid to its lowest level in two weeks against the Euro on Friday as risk appetite was boosted by signs of economic stabilization in China and a strong start to U.S. corporate earnings season.

The economic calendar in the U.S. is busy this week, with updates due on the housing market, retail sales, industrial production and trade which will give investors fresh insights into the health of the broader economy. Several Fed speakers are also on the docket, including Chicago Fed President Charles Evans and St. Louis Fed President James Bullard.

Among those, the focus will be on US retail sales. After a downfall in December and a surge in January, retail sales returned to normal in February, albeit with drops: 0.2% on the headline and 0.4% in core sales. Both figures are projected to increase: 0.7% on the headline and 0.7% in core sales.

Currency: JPY

Direction: Bearish
Confidence Level: 
★★
Analyst: 
Markets calmed down on Friday and the risk-on mood has pushed safe-haven currencies USD and JPY lower. China is to release the critical quarterly GDP number, which is likely to show a rebound after the slowdown. If this happens, this could boost the risk sentiment in the market and keep a cap on safe-haven JPY.

Currency: AUD

Direction: Bullish
Confidence Level: 
★★
Analyst: 
China is to release what will be closely watched economic data, including a look at first-quarter growth on Wednesday after a flurry of soft data from the world’s second-largest economy spooked investors earlier this year. After recording an annualized growth rate of 6.4% in Q4 2018, another slide to 6.3% is projected. Another important event is China’s industrial output this Wednesday, which is expected to pick up from 5.3% to 5.6% in March. A stronger Chinese economy could send the USD and the JPY lower and boost AUD largely.

Currency: NZD

Direction: Bullish
Confidence Level: 
★★
Analyst: 
This week will see more releases of domestic data including Tuesday’s GDT price index and CPI. The RBNZ governor mentioned last week that the domestic economy remains strong and this could indicate a better-than-expected data print this week. Furthermore, the boosted risk sentiment could send NZD higher from their recent low.

Currency: CAD

Direction: Bearish
Confidence Level: 
★★
Analyst: 
This week will see important domestic data releases including manufacturing sales, CPI, trade balance, and retail sales. The U.S.-China trade war has struck the manufacturing sector and the indicator posted three straight declines before rebounding with a gain of 1.0% in January. It is likely that the manufacturing will continue to drop in February due to the continuing geopolitics between China and Canada caused by Huawei. Another key focus will be on the OPEC meeting to be held this Wednesday where OPEC and its partners are unlikely to decide on their output policy this week as it would be too early to get a clear picture of the impact of their supply cuts on the market by then.

Don't miss out on the technical analysis setups for the week. Download our report here!

 

The information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted.

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