The main events in North America next week will be the release of U.S. consumer confidence data, the ISM Manufacturing Index and the nonfarm payrolls report from the U.S. Bureau of Labor Statistics. Currency strategists will also pay close attention to the G20 meeting in London, England at the end of the week.
Neil Mellor, senior currency strategist at The Bank of New York Mellon, said the G20 meeting could be a positive for the U.S. dollar. The U.S. dollar has been under pressure since the Fed announced quantitative easing measures on March 18.
Bank of England Governor Mervyn King has indicated that he would like to temper Prime Minister Gordon Brown's "zeal" for fiscal stimulus. He said that if the G20 disappoints markets with a lower-than-expected stimulus plan, the U.S. dollar could rally.
"With the greenback yet to fully relinquish its status as a safe-haven currency of choice, things could well look rather different in the foreign exchange market one week from now," he said.
While the G20 will have an impact on currency markets at the end of the week, strategists will also pay close attention to equities, since any sharp sell-off could impact FX moves.
Conrad DeQuadros, economist at RDQ Economics, said the stock market rallies this week were partly based on better-than-expected data, such as the durable goods report, as well as the U.S. government's plan to buy up toxic assets. He noted that next week's ISM and nonfarm reports will likely disappoint, and could be a negative for equities.
"Next week we start to get the real key report on March activity ¥ the optimistic view on the economy may be challenged," he said.
Economists expect the ISM Manufacturing Index to climb marginally to 36.0 from 35.8.
The nonfarm payrolls report is expected to reveal 660k jobs lost, against 651k jobs lost in February.
"Right now we're looking for probably a worse-than-consensus payrolls result," said Guy LeBas, fixed income strategist at Janney Montgomery Scott.
LeBas said the negative data expected next week, combined with the Federal Reserve's bond purchases, will create a positive environment for U.S. bonds.
In Canada, markets will receive GDP results for January. Economists expect GDP to fall 0.7% against a 1.0% fall in December. Markets will also pay attention to comments from Bank of Canada Governor Mark Carney, who will be speaking at two separate events later in the week.
Sacha Tihanyi, currency strategist at Scotia Capital, said the Canadian dollar could be sensitive to any comments regarding quantitative easing measures. He said that if Carney hints at the possibility of implementing quantitative easing, the loonie could sell off sharply.
All times in EDT.
Sunday:
16:30 US Treasury's Geithner Speaks at IDB's Annual Meeting in Medellin, Colombia
Monday:
10:30 US Dallas Fed Manufacturing Activity March Exp: -50.0% Prior: -57.3%
13:00 US Treasury to Sell $31B 3-Month Bills
13:00 US Treasury to Sell $29B 6-Month Bills
Tuesday:
08:30 CA Gross Domestic Product (M/M) January Exp: -0.7% Prior: -1.0%
08:30 CA Raw Materials Price Index (M/M) February Exp: +1.0% Prior: +1.4%
08:30 CA Industrial Product Price (M/M) February Exp: +0.5% Prior: -0.1%
09:00 US S&P/Case-Shiller Home Price Index January Prior: +150.66
09:00 US S&P/Case-Shiller Composite-20 (Y/Y) January Exp: -18.6% Prior: -18.55%
09:00 US Fed's Stern Speaks in Washington on `Too Big to Fail'
09:45 US Chicago Purchasing Manager March Exp: +34.4 Prior: +34.2
10:00 US Consumer Confidence March Exp: +27.3 Prior: +25
10:00 US NAPM-Milwaukee March Prior: +29
13:00 US Fed's Plosser Speaks in Chicago on Financial Regulatory Reform
13:00 US Treasury to Sell 4-Week Bills 31-Mar
17:00 US ABC Consumer Confidence W/E March 29 Prior: -49
Wednesday:
07:00 US MBA Mortgage Applications W/E March 27 Prior: +32.2%
07:30 US Challenger Job Cuts (Y/Y) March Prior: +158.4%
08:15 US ADP Employment Change March Exp: -649K Prior: -697K
10:00 US ISM Manufacturing March Exp: +36.0 Prior: +35.8
10:00 US Pending Home Sales (M/M) February Exp: -0.5% Prior: -7.7%
10:00 US ISM Prices Paid March Exp: +33 Prior: +29
10:00 US Construction Spending (M/M) February Exp: -1.7% Prior: -3.3%
10:30 US DOE U.S. Crude Oil Inventories W/E March 27 Prior: +3302K
10:30 US DOE U.S. Gasoline Inventories W/E March 27 Prior: -1144K
10:30 US DOE U.S. Distillate Inventory W/E March 27 Prior: -1584K
10:30 US DOE U.S. Heat Oil Inventories W/E March 27 Prior: +1014K
10:30 US DOE U.S. Refinery Utilization W/E March 27 Prior: -0.13%
13:00 US Fed's Pianalto Speaks in Columbus at Ohio Bankers' Day
April US Total Vehicle Sales March Exp: +9.2M Prior: +9.1M
April US Domestic Vehicle Sales March Exp: +6.5M Prior: +6.4M
Thursday:
08:30 US Initial Jobless Claims W/E March 28 Exp: +650K Prior: +652K
08:30 US Continuing Claims W/E March 21 Exp: 5580K Prior: +5560K
10:00 US Factory Orders February Exp: +1.2% Prior: -1.9%
10:30 US EIA Natural Gas Storage Change W/E March 27 Prior: +3
Friday:
08:30 US Change in Nonfarm Payrolls March Exp: -660K Prior: -651K
08:30 US Unemployment Rate March Exp: 8.5% Prior: 8.1%
08:30 US Change in Manufacturing Payrolls March Exp: -160K Prior: -168K
08:30 US Average Hourly Earnings (M/M) March Exp: +0.2% Prior: +0.2%
08:30 US Average Hourly Earnings (Y/Y) March Exp: +3.5% Prior: +3.6%
08:30 US Average Weekly Hours March Exp: +33.3 Prior: +33.3
10:00 US ISM Non-Manufacturing Composite March Exp: +42 Prior: +41.6
12:00 US Bernanke Speaks at Fed Credit-Markets Conference in Charlotte
By Megan Ainscow and edited by Sarah Sussman
©CEP News Ltd. 2009