25 February, 2019
Delayed data from the United States dominate the economic calendar for the week ahead. This includes some aspects of the housing market, the fourth quarter GDP figures and the latest retail sales report for January.
The data is unlikely to move the markets much especially after the weaker fourth-quarter GDP has already been priced in. However, some reports which are much more recent will be key as they could hold more information as to how the U.S. economy is faring in the first quarter of the year.
From the Eurozone, data this week will see the release of the flash inflation figures and the latest business activity covering the services and the manufacturing sectors.
Canada will be looking to the release of January’s inflation figures which could ease back following a surprise surge in December 2018.
Data from Australia, New Zealand and Japan are mostly sparse this week. It covers second-tier data such as the construction work done and private capital expenditures figure. This can give some insights into the latest GDP activity for Australia.
Switzerland will also be releasing its monthly GDP figures this week.
Here’s a quick recap of what’s to come in the currency markets this week.
The much delayed fourth-quarter GDP report is out this week. The delay was due to the December/January partial government shutdown which also impacted some economic news releases as well.
The fourth quarter GDP for the U.S.should show that activity eased to 2.6% in the final three months of 2018. This comes as the third quarter GDP showed a 3.4% increase in economic activity. The markets might have fully priced in this information given the delay on the release. Besides the GDP numbers, the quarterly non-farm productivity data should show a 1.7% increase. This is once again a slower pace in comparison to a 2.3% increase in the third quarter.
Housing data will cover the building permits and housing starts figures for November. The data should highlight that building permits and housing starts grew 1.29M and 1.25M respectively during the month.
The retail sales figures for January will be coming out as well this week. Just a few weeks ago, the December retail sales report released showed a sharp decline in activity in December. Investors search for evidence whether this slowdown prolongs and stretches into January as well.
Data from the U.S. this week concludes with the release of February’s ISM manufacturing data. In January, the manufacturing activity as measured by the index increased to 56.6 after slipping to 54.1 in December.
Personal spending, consumption details are also due this week.
Eurozone flash inflation estimates and PMI’s on the tap
Data from the Eurozone will see fresh leading economic indicators coming out this week. Markit’s purchase managers index data should show the manufacturing and services activity in the region during February.
Overall activity should see a slight moderation from the month before. However, data from Germany and other regional economies should remain subdued. The weak data continues to cast a shadow as the ECB mulls relaunching further easing options after it ended its QE program in December last year.
The flash inflation estimates is another data set to keep an eye on. Headline CPI scores a steady decrease, with the annual inflation rate as of January showing that inflation eased to 1.4%. Core inflation, on the other hand, has remained steady, rising slightly to 1.1%. Both measures of inflation remain well below the ECB’s 2.0% inflation target rate.
Statistics Canada will be releasing the monthly inflation data this week on Wednesday. The data covers the month of January.
In December, Canada’s inflation surprised to the upside as the consumer price index advanced 2.0% on an annual basis while rising 0.2% on the month in December 2018. Both measures beat estimates.
However, the gains in inflation are on one-off seasonal factors with the volatile components such as holiday tours and airfare costs surged during the month. As a result, inflation should ease back from the December highs in January.
The data comes as the Bank of Canada remains on the sidelines.
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