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Weekly outlook: March 27 - 31

3/27/2017, 9:41:06 AMMarket Analysis
Weekly outlook: March 27 - 31

 The dollar pulled back from a four-month trough against the safe haven yen on Friday after Republican leaders dropped legislation to replace the Affordable Care Actbefore a planned vote, in a setback to President Trump.

USD/JPY was up 0.4% at 111.36 late Friday after plumbing 110.63, its lowest level since November 23. For the week, the pair was down 1.16%.

Republican leaders pulled legislation to overhaul the U.S. healthcare system before a vote in the House of Representatives after it failed to gather enough support to pass.

The defeat for the bill added to doubts over the Trump administration’s ability to push through the pro-growth economic agenda promised by the president.

Investors viewed the Trump administration's failure to push through a healthcare overhaul as a sign he may also face further setbacks delivering on other policy pledges including corporate tax cuts, regulatory reform and infrastructure spending.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was little changed at 99.59 in late trade. The index dipped to 99.36 earlier in the session, an almost four month low.

The euro was slightly higher, with EUR/USD rising 0.14% to 1.0797, not fra from the seven-week highs set on Wednesday.

The single currency has been boosted by expectations for monetary tightening by the European Central Bank later this year and growing hopes that the far-right anti-EU leader Marine Le Pen will be defeated in the French presidential elections.

Sterling was lower, with GBP/USD down 0.38% to 1.2472 late Friday as investors braced for Britain to begin the process of exiting the EU on March 29.

The pound was also weaker against the euro, with EUR/GBP advancing 0.55% to 0.8658.

Meanwhile, the Canadian dollar slipped lower, with USD/CAD up 0.18% to 1.3375 in late trade after lackluster domestic inflation data indicated that the Bank of Canada would likely keep interest rates on hold for longer.

In the week ahead, investors will be continuing to monitor political developments in the U.S., as Trump’s promised tax reforms come into focus.

Expectations that the Trump administration would spur growth and inflation through fiscal stimulus pushed the dollar to 14-year highs in the weeks after the election.

But the greenback has weakened in recent week as it became apparent that the White House would have difficulty in delivering on its legislative agenda.

Market watchers will also be watching U.S. economic reports, including figures on personal income and spending and appearances by a number of Fed officials.

Ahead of the coming week, has compiled a list of these and other significant events likely to affect the markets.

Monday, March 27

The Ifo Institute is to report on German business climate.

Federal Reserve Bank of Chicago President Charles Evans and Dallas Fed President Robert Kaplan are both to speak.

Tuesday, March 28

The U.S. is to release data on consumer confidence.

Bank of Canada Governor Stephen Poloz is to speak.

Dallas Fed President Robert Kaplan is to speak.

Wednesday, March 29

The UK is to publish data on net lending.

Chicago Fed President Charles Evans is to speak.

The U.S. is to release a report on pending homes sales.

Thursday, March 30

In the euro zone, Germany and Spain are to release preliminary data on inflation.

Canada is to publish figures on raw material price inflation.

The U.S. is to release revised data on fourth quarter growth along with the weekly report on initial jobless claims.

Friday, March 31

Japan is to publish data on household spending and inflation.

New Zealand is to report on business confidence.

China is to release its official manufacturing and services PMI’s.

Germany is to release figures on retail sales and unemployment change. Meanwhile, the euro zone is to publish preliminary data on inflation.

The UK is to report on the current account and release revised data on fourth quarter growth.

The U.S. is to round up the week with data on personal income and spending, a report on manufacturing activity in the Chicago region and revised data on consumer sentiment.