Weekly Forecast – February 27th
US political and economic developments will certainly be an important focus during the week ahead with a notable focus once again on President Trump as well as Fed Chair Yellen.
The forthcoming week contains important data releases which could have a significant impact on the March interest rate decision by the Federal Reserve.
The most important release will be the ISM manufacturing data due on Wednesday with the equivalent non-manufacturing release on Friday. Strong data and elevated readings for prices would strengthen the case for a March Fed move.
In terms of media coverage, the most important event will be US President Trump’s address to a joint session of Congress on Tuesday.
This will certainly be a big political event, especially as Trump needs Congressional support for tax legislation. Markets will also want to hear more details on his plans for tax reform and fiscal stimulus. In this context, what he does not say will be just as important as what he does say.
The Fed will enter a blackout period on March 4th ahead of the March 15th FOMC statement with both Fed Chair Yellen and Vice-Chair Fischer due to speak on Friday which will give important insight into the March decision.
The UK economic data will be important during the week as the monthly PMI reports are released. These surveys on business confidence give key insights into production and spending trends in the economy as well as inflation pressures.
There was a weaker tone last month and a recovery this month will be needed to curb speculation over a slowdown in the economy.
The House of Lords will also continue its debate over the Article 50 Bill and any attempt to introduce amendments would trigger Sterling volatility.
The latest Euro-zone inflation data is due for release on Tuesday and this will be important for underlying policy expectations ahead of the ECB policy meeting scheduled for the following week. In this context, any unofficial briefings from ECB officials will be a key focus.
Developments surrounding the French Presidential election will continue to have an important impact with opinion polls monitored closely and the Netherlands election due on March 15th will also come into focus.
The Bank of Canada will hold its latest monetary policy meeting on Wednesday March 1st with no change in interest rates expected.
The Chinese PMI data will be a significant focus on March 1st with confidence in the global economy tending to improve if there is a monthly improvement in the data.
Overall developments surrounding risk appetite and equities will continue to have an important impact.
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