The second quarter of the year started with a staggering employment report from the United States. As the world celebrated Easter, data out of the United States revealed that the economy added close to a million jobs in March. Moreover, the unemployment rate continued its decline, and previous releases for the months of January and February were revised higher.
The week ahead is rather short, as yesterday most banks were closed due to the Easter holiday, but it does not mean that traders will not have important economic events to consider. The International Monetary Fund (IMF) meetings are the highlight of the trading week, together with the Reserve Bank of Australia’s interest rate decision and the employment data from Canada.
Commodity Currencies In Focus in the Week Ahead
If last week was all about the NFP and the U.S. dollar, this week, the commodity currencies (i.e., the Australian dollar and the Canadian dollar) are in focus. Earlier today, the Reserve Bank of Australia left its cash rate unchanged, reiterating its willingness to keep the yield curve under control.
On Friday, the employment numbers from Canada will create volatility on the Canadian dollar pairs. The market expects 90k new jobs created in March and the unemployment rate to drop to 8%. Any positive surprise should push the Canadian dollar even higher.
The IMF meetings that take place every day this week may also trigger higher volatility in the currency market. These meetings are held twice a year, and the statements from the participants are enough to send currencies on a rollercoaster. On Thursday, the Federal Reserve Chairman, Jerome Powell, is expected to participate in a panel discussion about the global economy, and questions from the audience are expected.
The discussion comes one day after the FOMC minutes, to be released tomorrow. As such, the U.S. dollar traders will have plenty to consider this week, following the strong jobs report from last Friday.
Besides the regular economic calendar, the vaccination race alone is one that matters for market participants. Countries with a fast rollout have seen their currencies gaining lately (e.g., British pound, U.S. dollar), while regions with sluggish rollout suffered from slow economic growth.
All in all, an interesting week ahead, with plenty of events able to move markets. As always, the wild card is the U.S. equity market.