Market Analysis

Central bank action and US jobs report headline the economic docket this week

The economic calendar is full of high-impacting macroeconomic data this week, with traders and investing looking to key rate decisions from the Reserve Bank of Australia, Bank of Canada and European Central Bank. The US Non-farm payrolls job report for the month of February is also scheduled for release this week, with most economist predicting that the world’s largest economy created 185,000 new jobs last month.

The Reserve Bank of Australia is expected to keep the nations interest rate unchanged at 1.5 per cent for a record twenty-eight consecutive meeting this week, with markets pricing in more dovish rhetoric from the RBA. Last month central bank Governor Lowe talked down the nations economic prospects, while also slashing upcoming GDP forecasts, in a move that was seen a major bearish shift in policy communication to market participants.

The Bank of Canada is not expected to increase interest rates this week, as the BOC start to align with global central banks in adopting a more cautious tone towards rates. The Canadian economy has posted a mixed set of data recently, with Friday’s disappointing GDP results conflicting with the recent increase in oil prices and rise in monthly consumer price inflation. The Canadian Dollar is likely to continue Friday’s slump against the greenback if the Bank of Canada elaborates on plans to delay rate increases during the second fiscal quarter of 2019.

Much of the markets attention is likely to be focused on the European Central Bank monetary policy meeting this week, with expectations high that outgoing ECB President Mario Draghi could announce additional liquidity measures for some of the eurozone’s struggling financial institutions. Any delay or dismissal of the much speculated TLTRO programme could see the euro currency sold broadly, although most economists are expecting the ECB Governing Council to mention the programme after European Central Bank board member Benoit Coeure’s comments on TLTRO last month.

The US Non-farm payrolls jobs report is expected to show that 180,000 new jobs were created in the American economy last month, which is a decrease on January’s bumper 304,000 headline number. Last Friday’s ISM manufacturing report showed that US manufacturing sector activity is trending lower, which could lead to headwinds in inflation and consumer spending. US wage data inside the NFP job report is now one of the most closely watched monthly data points, with monthly US average earnings average earnings expected to increase by a solid 0.3%.


EUR/USD Daily Mount Chart | Source-Activtrader Platform

EUR/USD Daily Mount Chart | Source: ActivTrader 


Away from the central bank action and US jobs data, we also see key GDP releases from the South Korean, Australian and Japanese economy this week, as well as service sector data from the world’s two largest economies. Traders will also be on alert for Brexit news and earnings reports from US retail giant Target and UK based company Just Eat, which is an online food service that acts as a web-based intermediary between independent takeaway food outlets and customers.

The EUR/USD is expected to move higher while trading above the 1.1337 level, with key weekly technical resistance is found at the 1.1450 and 1.1550 levels. Any move below the 1.1337 level could provoke technical selling towards the 1.1280 and 1.1250 support regions, with the 1.1215 level the major support region to watch below.



Written by Nathan Batchelor, External Analyst


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