Attention turns back to data this week

2 April, 2018

Attention turns back to data this week

Asian equities kicked off Q2 on a positive note, taking their cue from Wall Street’s rally on Thursday. The gains came despite China imposing retaliatory tariffs on U.S. imports and Manufacturing PMI data falling short of economists’ forecasts.

So far China’s response has only been on the aluminum and steel tariffs, announced by the White House last month, and not on the proposed $60 billion in annual tariffs against Chinese products. This shows Beijing is unwilling to enter a trade war with the U.S., knowing that it has more to lose than to win. However, trade dispute will continue to dominate investors’ decisions heading into Q2.

Many traders remain away from their desks on Monday to spend time with their friends and family, so barring an unexpected announcement from the White House, expect markets to stay calm.

Macro data will be back in focus


Manufacturing and Service PMIs from Europe, UK, and the U.S. will be closely scrutinized by investors this week. In March, the euro area private sector expanded at its weakest pace since 2017, raising questions on whether the robust economic performance in the Eurozone during 2017 has come close to an end. Another slip in these leading indicators may well reinforce the belief that the global synchronized growth is losing momentum.  This will also justify the underperformance in European equities, where the DAX, CAC and IBEX fell 6.35%, 2.73% and 4.4% YTD respectively.

Eurozone inflation


Euro traders will have to give a special attention to the Eurozone preliminary CPI release for March on Wednesday. In February the harmonized inflation came at 1.1%, a 0.2% fall from January’s reading and slipping further away from European Central Bank’s target of just under 2%. Another disappointment on this front will raise the voices within the ECB members, advising against tightening monetary policy which is likely to add further pressure on the EURUSD after falling by more than 1.3% from last week’s highs.

U.S. NFP, the main event of the week


Friday’s U.S. nonfarm payrolls release is undoubtedly the key event of the week. The U.S. is expected to have added 198,000 jobs in March versus 313,000 in February. Meanwhile, unemployment is expected to drop by 0.1% to 4%, the level last seen 18 years ago. However, wage growth remains to be the key market moving piece, after showing an unexpected fall from 2.8% to 2.6% last month. Given that one of the main arguments in markets today is whether the Fed will raise rates by another 2 or 3 times in 2018, this figure will play an important role in pricing interest rates expectations, and thus the dollar’s direction.


Source link  
Euro shakes off political risk

The Euro strengthened slightly early Thursday, to trade at 1.1837 after hitting a new five-month low of 1.1761 the previous day. It seems that the single...

Risk aversion returns on higher yields

U.S. consumers are becoming more confident to spend. U.S. retail sales increased 0.3% in April, and March figures were revised up to 0.8% from 0.6%. When...

U.K. jobs under the radar

Stocks in Asia were uninspired by the slight gains on Wall Street during Monday trading. Although the easing of U.S.- China trade tensions was...


Emerging markets face punishment

The unprecedented turnaround of fortunes for the US Dollar is continuing to leave a lasting impression on the FX markets, following the Dollar Index...

What to watch in the week ahead?

U.S. equities rallied sharply at the end of last week as did the dollar, despite the NFP disappointment. The headline number for the rise in jobs came...

FOMC disappoints hawkish USD bulls

The FOMC has spoken, and to no ones surprise it has not raised interest rates at all for this month; opting to continue to hold them at the current 1.75%...


Oil ticks higher, dollar bulls stay in charge

When oil markets are headed towards rebalancing, any shocks due to supply shortage may lead to a huge spike in prices. Brent prices fell...

Investors no surprised by earnings surprises

Wall Street ended mixed on Monday as tech stocks continued to lead the major indices. The S&P 500 finished flat at 2,670, with the 1.07% gain...

It's number 3 again!

Number 3 has been of crucial significance in 2018. Trump has been predicting that his policies would bring an increase in annual growth to over than 3% a year. The Federal Reserve is expected...

  


Share: