Forex Weekly Analysis – March 21, 2011

By ForexMansion.com

Weekly Fundamental Analysis

Volatility returned to the capital markets this week as investors experienced large swings in numerous financial instruments.  Currencies, commodities and equities were liquidated as investors moved into safe haven investments early in the week.  The Nikkei equity markets moved lower by 16% on the first two trading days of the week, which could only be topped by the 5% move in the USD/JPY on late Wednesday evening / early Thursday morning. 

The G7 coordinated intervention, combined with a UN resolution on a Libyan no-fly zone, helped calm the markets on Friday.  Next week, market participants will continue to watch both the Japanese nuclear situation along, the unrest in the Middle East, along with numerous economic data points.

• Monday – March 21, 2011 – US Existing Home Sales (1400 GMT)

Existing home sales records sales of previously owned homes in the United States . This report provides a fairly accurate assessment of housing market conditions, and because of the sensitivity of the housing market to business cycle twists, it can be an important indicator of overall conditions at times when housing is particularly important to the economy. Given the prior week's very weak housing starts, the markets will keep a close eye on home sales.

• Tuesday – March 22, 2011 – UK Inflation Index (CPI/RPI – 930 GMT)

CPI Measures the change in prices for retail goods and services, including food and gas. The CPI is the key measure of inflation for the UK and is used by the Bank of England in making interest rate decisions. Given that the BOE is focused on inflation, these figures will be market moving for the pound.

• Tuesday – March 22, 2011 – Canada Retail Sales (1230 GMT)

Retail Sales gauges sales at Canadian retail outlets. The report serves as a direct gauge of consumption and consumer confidence. Retail Trade is one an important leading indicator for Canada and part of the Index of Leading Indicator used to forecast economic developments. With the Canadian dollar trading at the bottom end of the current range, a strong number will be the impetuous for further gains.

• Wednesday – March 23, 2011 – New Zealand GDP (21:45 GMT)

GDP is a comprehensive measure of a New Zealand 's overall production and consumption of goods and services. GDP serves as one of the primary measures of overall economic well-being. The weakness in the economy brought on by the recent earthquake in New Zealand could show up in these numbers.

• Thursday – March 24, 2011 – EMU Purchasing Managers Index (900 GMT)

The Euro-zone Services Purchasing Managers Index (PMI) assesses business conditions in the services sector. The figure is determined based on monthly surveys of executives in Germany , France , Ireland , Italy and Spain . Manufacturing in the Euro zone has remained strong despite downgrades by rating agency's of the periphery.

• Thursday – March 24, 2011 – US Durable Goods Orders (1230 GMT)

Durable goods orders is the value of orders placed for relatively long lasting goods. Durable Goods are expected to last more than three years. Such products often require large investments and usually reflect optimism on the part of the buyer that their expenditure will be worthwhile.

Because orders for goods have large sway over the actual production, this figure serves as an excellent forecast of U.S. output to come.

• Friday – March 25, 2011 – US GDP (1230 GMT)

The GDP for the United States is a gauge of the overall output (goods & services) of the U.S. economy on the continental US GDP is the most comprehensive overall measure of economic output and provides key insight as to the driving forces of the economy.