Summary:
- UK construction PMI expected to remain virtually unchanged in February
- Strong US wage growth may encourage Fed to reconsider rate hike pause
- Will ECB announce supportive measures for banks during the upcoming meeting?
At the beginning of this year markets speculated about an imminent interest rate cut in the United States as stock markets dove and global economy weakened. This is now off the table but markets assume no interest rate hike arrives either. With the US economy proving to be resilient, is the hike really so unrealistic?
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-9:30 am GMT - UK, Construction PMI for February. Expected: 50.5 pts, previous: 50.6 pts
What to watch for the remainder for the week?
NFP report in the US (Friday, 1:30pm GMT)
The NFP report turned out to be very strong in both December and January, dispelling fears of a sharp economic slowdown. The data published since then has been mixed overall but in general showed US resilience to the slowdown in global industry. What is the labour market keeps booming and wage growth (3.2% in January) accelerates? Will the Fed reconsider raising interest rates? That would have consequences for both indices (enjoying a prospect of no hikes so far) and the dollar (where rally has been halted for the same reason). Affected markets: US500, USDJPY.
The ECB meeting (Thursday, decision 12:45 am GMT, conference 1:30 pm GMT)
The ECB would love to enjoy the same economic resilience the Fed does but it needs to deal with economic slowdown instead. The Bank has already hinted it could reintroduce financing operations for the banks (TLTROs) but there also have been rumours it could raise deposit rate to help banks. It would be interesting to see how markets would react to such controversial move. Affected markets: EURUSD, DE30.
US fuels inventory data (Wednesday, 3:30 pm GMT)
The oil price has been hit lately with Trump comments but it looks as the OPEC wants to stick with its output reduction plans to boost prices. At the same time we are entering a period of seasonal declines in inventories and already the last week showed a major withdrawal. Investors should certainly track the DOE reports carefully. Affected markets: OIL, OIL.WTI.
EURUSD somewhat halted recovery after failing to break above the 50-session moving average and 1.14 handle. The pair is likely to be traded more actively this week thanks to ECB meeting and NFP report release. The aforementioned moving average as well as the support zone ranging around 1.13 handle remain levels to watch in the nearby future. Source: xStation
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