5th February 2018 - 9th February 2018
Economic data out of the Eurozone this morning includes January’s finalized service sector PMI numbers, together with the Eurozone’s retail sales figures. The EUR bulls will be looking for positive retail sales figures to support a more optimistic view on inflation, but following disappointing numbers out of France and Germany last week, forecasts are EUR negative. The service sector PMIs could provide some support however, with Spain and Italy service sector output expected to rise at the turn of the year. For the Pound, economic data includes January’s service sector PMI numbers, which will be of particular importance as the markets look to get a sense of where the economy is heading at the start of the year. While the Pound was able to stomach softer manufacturing and construction PMI numbers, any weak service sector data will be a negative for the Pound this morning. Forecasts are sterling positive, though how much upside there is for the Pound will be Brexit dependent as Theresa May’s political dramas worsen, with the Tory Party now divided on Brexit, trade and customs. Across the Pond, the Dollar was on the back foot through the early part of the day, down 0.06% to 89.141, with economic data out of the U.S this afternoon including the market’s preferred ISM Non-manufacturing PMI figures for January and finalized Markit survey service sector PMI numbers. Forecasts are Dollar positive, though the Dollar may struggle to see any major upside with the possibility of another government shutdown looming, as the 8th February deadline approaches. Progress on immigration laws for the so called ‘Dreamers’ will be the key driver for the Dollar, though there will be influence from the stats, particularly if there is further evidence of an uptick in inflation in today’s service sector PMI numbers. On Tuesday, it will begin with the Interest Rate Decision from Reserve Bank of Australia, if the RBA is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the AUD. From Canada, International Merchandise Trade will be released is the difference in the value of its imports and exports of Canadian goods excluding intangibles like services. Export data can give an important reflection of Canadian growth as tangible goods like oil, gold and manufacturing dominate a large part of Canada 's GDP. On Wednesday, ADP Employment report from US will be released with speech from the outgoing President of the New York Fed, a permanent voter on the FOMC, has been aligned with the central thinking of the Fed, especially with that of now-former Fed Chair Janet Yellen. He will speak at an event in New York and may comment on the jobs report as well as on the path of hikes for the Fed. The Reserve Bank of New Zealand is expected to leave the interest rate unchanged at 1.75%. That doesn’t mean no impact on markets. The central bank will have the chance to lay out its updated goals on monetary policy, react to the jobs report and perhaps talk down the currency. The press conference is scheduled for 21:00, an hour after the release and Governor Spencer will also address lawmakers. On Thursday, the Bank of England is the focus on the day as expected to leave the interest rate unchanged at 0.50% after hiking it to this level in November. However, they will certainly move the market. In addition to the decision and the meeting minutes, the BOE will also publish the Quarterly Inflation Report, which contains a wider assessment of the economy and the path of inflation. This “Super Thursday” becomes even more “super” with the publication of the Inflation Letter. Governor Mark Carney is obliged to send an open letter to the Chancellor of the Exchequer Phillip Hammond and explain why inflation breached the 1-3% range. This happened for a short time and inflation is expected to fall. Nevertheless, the abundance of documents that the BOE releases should supply a lot of material to move markets. The initial response will likely come from the voting pattern. Any deviation from a unanimous vote to leave rates unchanged will stir the pound. Afterwards, the assessment of the economy and more importantly, inflation, will have its say. On Friday, Monetary Policy Statement from RBA will be released which reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. It is considered as a clear guide to the future RBA interest rate policy. Any changes in this report affect the AUD volatility followed by UK Industrial Production that measures outputs of the UK factories and mines. Changes in industrial production are widely followed as a major indicator of strength in the manufacturing sector. From Canada Unemployement Rate is due as the number of unemployed workers divided by the total civilian labor force. It is a leading indicator for the Canadian Economy. If the rate is up, it indicates a lack of expansion within the Canadian labor market. As a result, a rise leads to weaken the Canadian economyMonday
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