U.S. Housing Data, U.S. Core Durable Goods Orders and U.S. Unemployment Claims are the main events this week. Here is an outlook on the market movers lined ahead.
The U.S. central bank decided unanimously to advance with its $600 billion bond-buying plan despite the considerable improvement in the economy and the job market. This statement was much brighter than the previous one although indicating that economic growth is disappointingly slow. The Fed repeated its statement to keep interest rates near zero, for an extended period.
- US Existing Home Sales: Monday, 14:00. Sales of U.S. existing homes unexpectedly climbed in January by 2.7% to a 5.36 million annual rate the highest level in eight months due to investors’ transactions of foreclosures and short sales. The rise does not reflect a real recovery in the market since the Job market has not fully recovered and Americans are not in a position to consider home ownership. A small drop to 5.15 million is expected now.
- UK Inflation Data: Tuesday, 9:30. The U.K.’s CPI annual inflation climbed by 4% in January from 3.7% in December thanks to the increase in the standard rate of value-added tax, or VAT, to 20% and the continued increase in the price of crude oil. This rise doubles the BOE official target rate and may force the Bank of England to hike interest rates sooner than expected. CPI is forecasted to rise by 4.2%.
- UK MPC Meeting Minutes: Wednesday, 9:30. Policy makers of the Bank of England left the key interest rate unchanged and maintained the amount of quantitative easing at GBP 200 billion by a split vote. Six members including Governor Mervyn King preferred to hold the key interest rate at 0.5% while Andrew Sentance, Spencer Dale and Martin Weale disagreed. Eight members of the MPC voted to maintain the size of QE at GBP 200 billion. Adam Posen preferred to increase the size of the asset purchase program by GBP 50 billion to GBP 250 billion.
- US New Home Sales: Wednesday, 14:00. Purchases of new houses in the U.S. fell more than predicted in January to a 284,000 annual rate. California tax credit and bad weather may have contributed to the fall. Foreclosures are more attractive to prospective buyers due to their low prices compared to new home costs. Another rise of 292,000 is expected now.
- New Zealand GDP: Wednesday, 21:45. New Zealand’s economy decreased by 0.2% in the third quarter from 0.1% gain in the previous quarter, while economists predicted 0.1% increase. The decline in GDP was due to weakness in the primary and goods-producing industries.
- US Core Durable Goods Orders: Thursday, 12:30. New orders for durable goods rose 2.7% in January, while Core Durable Goods Orders excluding the volatile transportation component an unexpected 3.6%, following a 3.0% gain in December. The transportation segment climbed 27.6% in January due to aircraft orders. Nevertheless, these figures show an improvement in the market. A further climb of 2.2% is predicted.
- US Unemployment Claims: Thursday, 12:30. The number of new unemployment claims dropped by 16,000 claims to 385,000 following 401,000 in the previous week showing improvement is continuing in the labor market. The score was better than the 388,000 expected by analysts. Fewer firings along with increased hiring and a lower unemployment rate may help lift household spending, which accounts for 70 percent of the economy. A small rise to 392,000 is forecasted now.
- Euro-Zone German Ifo Business Climate: Friday, 9:00. Business confidence in Germany continued to improve in February, reaching 111.2 in February from 110.3 in January. This is the ninth climb in a row indicating rising optimism among businesses regarding the German economy. Exporting companies were more satisfied than retailers nevertheless German economy maintained its strong start to 2011.
*All times are GMT.
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