Summary:
- Delayed GDP report and Powell testimony scheduled for this week
- Kim Jong Un and Donald Trump will meet on Wednesday
- Mark Carney and Stefan Ingves will deliver speeches today
Global equities extended ongoing recovery last week as trade optimism dominated newsflow. However, the week ahead will be crucial as US-China negotiations are entering final stage marked by new uncertainties. This week we also see release of the most important reading delayed by the US shutdown - GDP report for Q4 2018.
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Open account Try demo Download mobile app Download mobile appReadings and events scheduled for Monday:
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10:00 am GMT - Bank of England Governor Mark Carney speaks in London, United Kingdom
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3:00 pm GMT - US, Wholesale inventories for December (preliminary). Expected: 0.2% MoM, previous: 0.3% MoM
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3:30 pm GMT - US, Dallas Fed manufacturing index for February. Expected: 4.8, previous: 1
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5:15 pm GMT - Riksbank Governor Stefan Ingves speaks in Uppsala, Sweden
What to watch for the remainder of the week?
Data from the United States: GDP (Thursday, 1:30 pm GMT), ISM manufacturing (Friday, 3:00 pm GMT), Conference Board (Tuesday, 3:00 pm GMT), Powell testimony (Senate - Tuesday, House - Wednesday)
The US dollar struggled last week helping euro as well as other majors regain some ground. The US currency will remain in the spotlight this week thanks to a range of scheduled releases, including delayed GDP report for Q4 2018. Growth in the final quarter of the previous year is expected to have fallen back below the 2.5% threshold. Apart from that, one should keep in mind that the Fed Chairman, Jerome Powell, is set to deliver a semi-annual testimony to congressional panels on Wednesday and Thursday. Affected markets: US500, USDJPY.
Politics: trade conflict (whole week), Kim-Trump summit (Wednesday-Thursday), Brexit update (Tuesday)
Investors can expect heavy media coverage of the political events this week as some high-profile events are scheduled. While “tariff deadline” was extended and substantial progress was made during the negotiations, the US and China are said to have enter a critical phase of trade talks. No meetings are scheduled for this week so far but one should be wary that any reports or rumours on the matter may significantly move markets. Elsewhere, Donald Trump will meet with Kim Jong Un and try to win some guarantees on Korean Peninsula denuclearization process. Prime Minister Theresa May will update House of Commons on Brexit talks’ progress on Tuesday. The UK lawmakers were expected to vote on new developments the next day but the PM once again postponed the vote. Affected markets: AUDUSD, GBPUSD.
Inflation report from euro area (Friday, 10:00 am GMT)
European manufacturing gauge dipped into contraction area in February hinting that the worst may still be ahead of us. Combining it with a sluggish price growth of 1.4% YoY in January we get a picture that does not warrant a rate hike to say the least. More signs confirming that the euro area is coping with an economic slowdown and further deceleration of inflation metrics may seriously spoil the moods on the EUR market. Having said that, investors should follow Friday’s report carefully as it comes just a few days ahead of the EBC meeting. Affected markets: EURUSD, DE30.
EURUSD keeps swinging up and down in the 1.1300-1.1470 range. The latest false break lower brough the pair to the vicinity of 1.1230 handle was quickly erased and the price is back above 1.1350. Trade talks and European inflation print may spur significant volatility on the pair this week therefore traders should keep on guard, especially in case the price approaches 50-session moving average (green line on the chart above). Source: xStation5
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