The EUR/JPY and USD/JPY rose on Friday after finance ministers from the Group of 20 nations indicated that they support Japan’s efforts to spur growth through aggressive monetary easing policies. Japan’s Finance Minister Taro Aso said that the Bank of Japan’s unprecedented easing program is aimed at achieving price stability and economic recovery and was in line with the G-20’s February agreement. The statement eased concerns that Japan would face criticism after it announced earlier this month that it plans to double the size of its asset purchase program over the next two years. “Japan’s recent policy actions are intended to stop deflation and support domestic demand,” the G-20 said. BoJ Governor Haruhiko Kuroda welcomed the G-20 statement, saying, “Now that we have obtained the support of the international community, we will be able to implement our program with confidence”. The cable was lower on Friday after Fitch’s ratings agency downgraded the UK’s triple-A rating by one notch to AA+ with a stable outlook, citing the deteriorating economic outlook.
In the week ahead, investors will be awaiting Friday’s US data on first quarter growth amid lingering concerns that the US economic recovery is losing momentum. Markets will also be closely watching UK data on first quarter growth, as well as reports on manufacturing and service sector activity in the euro zone and the outcomes of policy meetings by the BoJ and the Reserve Bank of New Zealand.
Monday, April 22
The US is to release private sector data on existing home sales, a leading indicator of demand in the housing market.
Tuesday, April 23
China is to publish its HSBC manufacturing index, a leading economic indicator. The euro zone is to release data on manufacturing and service sector activity across the currency bloc, while Germany and France are to release individual reports. The UK is to publish official data on public sector net borrowing and private sector data on industrial order expectations. Canada is to publish official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity. Bank of Canada Governor Mark Carney is to speak; his comments will be closely watched for indications on the future possible direction of monetary policy. The US is to produce official data on new home sales as well as preliminary data on manufacturing activity.
Wednesday, April 24
The RBNZ is to announce its benchmark interest rate. The announcement is to be accompanied by the bank’s rate statement, which contains important insights into the economic outlook. Australia is to publish official data on consumer price inflation, which accounts for the majority of overall inflation. The UK is to release private sector data on retail sales, an important indicator of economic health. In the euro zone, Germany and Italy are to hold auctions of 10-year government bonds. Meanwhile, the Ifo Institute is to release a report on German business climate, a leading economic indicator. The US is to release government data on durable goods orders, a leading indicator of production, as well as data on crude oil inventories. Later Wednesday, BoC Governor Mark Carney is to speak.
Thursday, April 25
Markets in Australia, New Zealand and Italy are to remain closed for national holidays. Spain is to publish official data on the unemployment rate, a leading economic indicator. The UK is to release preliminary data on first quarter gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health. The US is to produce the weekly government report on initial jobless claims later in the trading day.
Friday, April 26
The BoJ is to announce its benchmark interest rate. The announcement is to be accompanied by the bank’s monetary policy statement, which contains important insights into the economic outlook. The BoJ is to hold a press conference to discuss the monetary policy decision after the rate announcement. Japan is also to release official data on consumer inflation. New Zealand is to publish official data on the trade balance, the difference in value between imports and exports. The US is to round up the week with preliminary data on first quarter growth, the broadest indicator of economic activity and the leading measure of the economy’s health. The US is also to release revised data from the University of Michigan on consumer sentiment and inflation expectations.
EasyForexNews Research Team