By ForexMansion.com

Riskier assets continued to benefit pushing the Yen lower, and driving equity markets higher.  The week was anchored by better than expected economic data in the US, that added fuel to the positive momentum.

US Nonfarm payrolls rose by 216,000 in March as the private-sector added 230,000 jobs, according to the Labor Department. Economists surveyed s had forecast payrolls would rise by 195,000.The February number was revised upward by 2,000 to an increase of 194,000 jobs, from a previous estimated gain of 192,000. The unemployment rate, edged lower to 8.8% last month, the lowest level since March 2009. Analysts had estimated that the rate would remain unchanged at 8.9%.

Private-sector employment, which account for about 70% of the work force, added 230,000 jobs in March. The Department of Labor’s number of private sector was in-line with the ADP employment report on private sector employment released early this week on Wednesday.  The February number was revised upward to show a 240,000 gain. The government sector lost nearly 14,000 jobs in March.

Next week, market participants will focus on:

  • Monday April 4, 2011 – EMU PPI (900 GMT)

The PPI measures prices at the producer level before they are passed along to consumers. Since the producer price index measures prices of consumer goods and capital equipment, a portion of the inflation at the producer level gets passed through to the HICP. The annual inflation rate as measured by CPI jumped to 2.6% from 2.4% in February, the highest level since October 2008 when the rate was 3.2%.  This was likely cause by a higher PPI.  A higher than expected number will push the Euro higher as expectation for a rate hike will increase.

  • Tuesday April 5, 2011 – Reserve Bank of Australia Interest Rate Decision (430 GMT)

The Reserve Bank of Australia’s (RBA’s) main responsibility is monetary policy. Policy decisions are made by the Reserve Bank Board with the objective of achieving low and stable inflation over the medium term. Other responsibilities include maintaining financial system stability, while at the same time promoting the safety and efficiency of the payments system.  With growth slowed by floods and lower exports due to Chinese interest rate tightening, the RBA will likely remain on hold.

  • Tuesday April 5, 2011 – EMU Retail Sales (900 GMT)

Retail sales are important indicators of domestic consumer demand and are monitored closely by analysts as an important input to GDP. If you know what consumers are up to, you will have a pretty good idea on where the economy is headed. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company’s quarterly or annual report. 

  • Tuesday April 5, 2011 – US ISM Services (1400 GMT)

ISM non-manufacturing survey’s composite index tells investors the economic backdrop for the various markets. The non-manufacturing composite index has four equally weighted components: business activity, new orders, employment, and supplier deliveries. The ISM did not begin publishing the composite index until the release for January 2008. Prior to 2008, markets focused on the business activity index. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly-and causing potential inflationary pressures.

  • Wednesday April 6, 2011 – UK Industrial Production (930 GMT)

Industrial and manufacturing outputs are watched carefully by market participants despite the decline in the importance of manufacturing in the UK economy. Manufacturing output is the preferred number rather than industrial production which can be unduly influenced by electrical generation and weather. The BOE is on the fence voting 6-3 in their last monetary policy meeting.  Growth has been slow and inflation has been high.  If growth numbers begin to pick up, the BOE will probably move toward tightening.

  • Thursday – April 7, 2011 – UK Producer Price Index (830 GMT)

The PPI measures prices at the producer level before they are passed along to consumers. Since the producer price index measures prices of consumer goods and capital equipment, a portion of the inflation at the producer level gets passed through to the consumer price index (CPI). The PPI is considered a precursor of both consumer price inflation and profits. If the prices paid to manufacturers increase, businesses are faced with either charging higher prices or they taking a cut in profits. The ability to pass along price increases depends on the strength and competitiveness of the marketplace.  Higher PPI, will generate a greater push to increase rates, pushing the pound higher.

  • Thursday April 7, 2011 – ECB Interest Rate Decision (1145 GMT)

This has been anticipated for the past few weeks.  Expectations are for an increase of rates of 25 basis points.  The risk is that nothing is done.  The Euro will decline on any dovish comments.

  • Friday – April 8, 2011 – Chinese Merchandise Trade

Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they also affect currency values in foreign exchange markets. However, the foreign exchange impact is muted here given that the currency is pegged to a basket of currencies and its value is determined daily by the government. China’s growth stems from its exports to the industrialized world. And in turn, global growth is dependent upon Chinese growth.  Merchandise trade statistics are compiled and published by Customs General Administration (CGA) on a monthly basis. Preliminary estimates are available about 13 days after the reference month with details available within 25 days. 

Originally posted here