Fed Minutes and March’s Non-farm Payrolls in Focus, U.K. Trio of Reports on Economic Activity Awaited

U.S. shares finished Friday’s session lower as mixed economic data and losses in financial shares weighed on the market. At the close on NYSE, the Dow Jones Industrial Average lost 0.31% at 20,663, the S&P 500 dropped 0.23% and the Nasdaq Composite inched 0.04% lower at 5911.74. The Dow suffered its first monthly decrease since October but all three major indices posted quarterly gains of at least 4.6%. Stock markets were spurred by expectations that President Donald Trump will fulfill his pledges including tax reform, deregulation and infrastructure spending.

The U.S. dollar ended flat versus a basket of six major currencies on the back of dovish remarks from a Federal Reserve official. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six rivals, was almost unchanged at 100.22 late Friday and recorded a rise of 0.78% for the week – the first weekly advance after three weeks of losses.

For the month, the dollar index dropped 0.9%, contributing to a decrease of 3% in the first quarter amid growing uncertainties over the Trump administration’s capability to have its economic proposals passed while the U.S. central bank signaled gradual rate hikes in coming months. Bullish sentiment on the greenback was further hit after New York Fed President William Dudley on Friday said that the Federal Reserve was in no rush to tighten monetary policy.

Last Friday, the Commerce Department reported consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.1%, missing expectations of a 0.2% increase. Meanwhile, the Chicago purchasing managers’ index rose to 57.7 in March from 57.4 in February, beating market forecast for a rise to 57.2 last month. Also releasing data on Friday, the University of Michigan said its consumer sentiment index slipped to 96.9 in March from an initial estimate of 97.6, which was well below economists’ forecast for a reading at 97.8

In the week ahead, investors will be looking to Wednesday’s Fed minutes for fresh indications on the timing of the next U.S. rate hike ahead of Friday’s closely watched nonfarm payrolls report. On Wednesday, the Fed is due to release minutes of its most recent policy meeting when it decided to raise its benchmark interest rate by 25 basis points following its meeting on March 15 and stuck to its projection for two more hikes this year.

Besides the minutes, some Fed officials will speak in the coming week, with New York Fed President William Dudley, Philadelphia Fed President Patrick Harker and Richmond Fed President Jeffrey Lacker all set to speak Monday while Dudley is on tap again on Friday.

On Friday, the U.S. Labor Department will release its March nonfarm payrolls report which is forecast to show jobs growth of 180,000, following an increase of 235,000 in February. The unemployment rate is expected to hold steady at 4.7%, while average hourly earnings may have risen 0.3% after gaining 0.2% a month earlier.

In addition to the employment report, this week’s data-heavy calendar also features reports on U.S. ISM Manufacturing PMI on Monday, ISM Non-Manufacturing PMI and ISM Non-Manufacturing PMI on Wednesday, followed by wholesale inventories and consumer credit on Friday.

British Pound surged strongly against the dollar on Friday after final data published by the Office for National Statistics confirmed that the UK economy grew 0.7% in the fourth quarter. Sterling pushed higher, with GBP/USD advancing 0.65% to 1.2550. The pair extended its upward rally to a third week in a row. The U.K. will release readings on March manufacturing sector activity on Monday, followed by a report on the construction sector on Tuesday and the service sector on Wednesday.

All PMI data are forecast to witness a rise last month from a month earlier with the manufacturing PMI expected to rise to 55.1 from 54.6 in February. Construction activity and services sector are also anticipated to improve slightly to 52.6 and 53.5 from 52.5 and 53.3 in the previous month, respectively.

Australia is to release data on retail sales on Monday, which is expected to rise 0.3 percent. On Tuesday, the RBA’s latest interest rate decision will be announced. The central bank is highly anticipated to keep rates unchanged at the current record-low of 1.5% for the ninth straight meeting and maintain its neutral policy stance, given the economy’s convincing rebound last quarter, rising commodity exports and a robust increase in household debt levels.

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