Weekly Forecast – February 20th
Below are the events expected in the following week, and our take on currency movements:
Political developments on both sides of the Atlantic are likely to dominate for the week ahead with uncertainty surrounding the Trump Administration and the French Presidential election.
The forthcoming week is relatively lacklustre in terms of economic data with existing and new home sales data due on Wednesday and Friday respectively.
The latest US PMI manufacturing and services-sector data will be released on Tuesday and could be important signals of activity, but market reaction is likely to be limited.
The Federal Reserve minutes from January’s FOMC meeting will be watched closely even though the impact will be lessened by this week’s testimony from Fed Chair Yellen in which she called for further gradual increases in interest rates.
Most attention will focus on any commentary surrounding the likelihood that interest rates will be increased at the March meeting.
Developments surrounding the US Administration will also continue to be a very important focus during the week, especially with markets waiting for President Trump’s tax-cut proposals. Any Treasury comments on currencies and the dollar policy could trigger substantial currency moves.
The UK economic data is unlikely to have a major impact with the revised fourth-quarter GDP and investment data due for release on Wednesday.
At this stage, there are no significant events due from the Bank of England for the week ahead.
Parliament will resume sitting after a recess and markets will monitor trends in the Brexit debate closely as debate surrounds the Article 50 Bill continues in the House of Lords. The main focus will be on whether the government’s planned timing for triggering Article 50 around March 10th is jeopardised.
The latest Euro-zone PMI data on Tuesday will be an important focus with markets looking to assess whether momentum in the economy has been sustained and if there is evidence of further upward pressure on prices.
Tensions surrounding Greek debt will be an important focus at Monday’s Eurogroup meeting with the French Presidential election also an important focus.
Comments from Reserve Bank of Australia Governor Lowe will be monitored closely during the week with an appearance before the House of Representatives on Friday.
Overall trends in risk appetite and global equity markets will be a key focus during the week ahead.
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