The U.S. dollar started to get its grove back last week, with the Dollar Spot Index trading modestly higher. However, Friday’s weak personal spending data stopped the greenback’s advance. This week’s economic docket is busy and should provide the catalyst for currency movements. Later this morning, Markit Manufacturing should is expected to show an advance to 53.5 in March, up slightly from 53.4 in the month prior. At 10 a.m., ISM Manufacturing is expected to show a modest decline. Attention will then shift to comments from the Fed’s William Dudley in New York. Last week, Dudley commented that two additional rate hikes this year “seems reasonable.”
Factory orders and durable goods orders will cross the wires tomorrow, followed by ADP’s private payroll print on Wednesday morning. Economists predict that the economy added 195K private jobs in the month of March, a stark decline from February’s impressive 298K print. Markit and ISM service data is also expected to be released. Wednesday afternoon sees the release of the minutes from the Federal Reserve’s March meeting. As always, market participants will scour the minutes for clues about additional rate hikes.
The biggest risk event will be the release of Non-farm payrolls and the unemployment rate on Friday. The consensus is that the economy added 175K jobs in March, down from 235 in February. The unemployment rate is expected to hold at 4.7%. A stronger-than-expected jobs print could send the dollar to the stronger end of recent ranges.
The Euro is mostly unchanged to start the week. The Euro retreated late last week as economic data failed to impress. Consumer prices only rose 1.5%, well under the European Central Bank’s target and core prices rose 0.7%.
The Euro also has some political pressure to deal with as the French elections loom later this month. It is still widely expected that far-right candidate Marine Le Pen will lose, which would give some relief to the common currency.
The British pound fell for the first time in three trading days following the release of poor economic data. U.K. manufacturing retreated for the third straight month in March. IHS Markit’s factory Purchasing managers Index declined to 54.2 from a revised 54.5 in February. However, a reading above 50 indicates an expansion. Nevertheless, the sterling is within 1% of its 7-week high that it reached against the U.S. dollar earlier last week.
As the U.K. begins it official negotiations to leave the European Union, we will keep a keen eye on political headlines that can affect the GBP/USD cross.