Weekly Forecast – March 27
Below are the events expected in the following week, and our take on currency movements:
Political developments are again likely to be a dominant focus on the week as the US Administration considers its next moves following failure to pass the Healthcare Act and the UK triggers Article 50.
The US trade data will be watched closely this week as a wider than expected deficit would increase tensions surrounding trade issues and increase the risk of protectionist rhetoric from the US Administration.
The US consumer confidence data is due on Tuesday, although the overall impact is likely to be limited unless there is a very sharp decline.
The latest PCE inflation data will also be released which could have implications. Comments from Federal Reserve speakers will be watched closely although, again, there are no comments due from senior members.
The main focus is likely to be on political developments with the US Administration considering the next steps following the failure to pass the Healthcare Act. The main focus will be on tax policies with Trump suggesting that there will now be a focus on tax reform and stimulus.
The latest UK current account data will be released on Friday and could have a big impact if there is a much wider than expected deficit, although the main focus is likely to be on political developments.
The UK government is set to invoke Article 50 on Wednesday which will formally start the negotiation period ahead of an EU exit. There is also likely to be further European legislation introduced during the week.
The stance of EU negotiators and other EU countries will be particularly important for sentiment surrounding the UK economy and political developments. Sterling volatility is likely to be high during the week.
The latest Euro-zone CPI inflation data will be released on Friday and will be potentially important for expectations surrounding ECB policies. The German inflation data will also be important on Thursday which could be important for the German Bundesbank stance.
Developments surrounding the French Presidential election will also be monitored closely ahead of the first round due to be held on April 23rd.
China will release its latest PMI data late in the week which could have an important impact on expectations surrounding the global economic outlook.
Global trade policies and trends in equity markets will also be important with markets watching trends in commodity prices closely.
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