Hopes around trade and the Fed’s messages kept the US Dollar busy. What’s next? The testimony by Fed Chair Powell and the US GDP report stand out as February draws to an end. Here the highlights for the next week.
Negotiations between the US and China continued with reports of progress. The US reportedly asked China to maintain a stable yuan and the yuan strengthened, a sign of both sides getting closer. The dollar dipped on the upbeat mood. In the UK, several lawmakers from both main parties abandoned ship amid dismay on Brexit policies. The centrist Independent Group complicates matters as the clock continues ticking towards Brexit Day. Warnings about the German economy continued weighing on the euro.
- New Zealand Retail Sales: Sunday, 21:45. New Zealand publishes its retail sales report only once per quarter, making every publication significant. The report for Q3 badly disappointed. Consumption remained flat against an expected rise of 1%. Core sales did rise but by only 0.4%.
- US CB Consumer Confidence: Tuesday, 15:00. Consumer Confidence has been dropping from the highs. This was seen in Conference Board’s gauge as well as the one published by the University of Michigan. The CB measure dropped to 120.2 points in January and the number for February may be somewhat better.
- US Fed Chair Powell testifies Tuesday, around 15:00 GMT and also Wednesday. Jerome Powell goes to Capitol Hill to provide his semi-annual testimony. His prepared remarks and the lengthy Q&A sessions always move markets. The Fed recently made a dovish shift, pledging patience on interest rates and opening the door to ending the balance sheet reduction program prematurely. Markets will want updates on these two fronts. In addition, comments about inflation and perhaps a hint about the GDP number coming on Thursday will be of interest.
- UK Parliament votes on Brexit: Wednesday, tentative. UK PM Theresa May received a mandate from Parliament to renegotiate the Brexit deal, the Irish Backstop in particular. As time passes by, there seems to be no apparent solution to the issue. 30 days before Brexit, assuming there is no delay, Parliament convenes again to vote. The event will not only affect the pound but also the euro and the general market mood.
- US GDP: Thursday, 13:30. At this point in the quarter, the US releases the second estimate for GDP growth. However, the first release was effectively canceled due to the government shutdown. The US economy slowed down in Q3 to 3.4% annualized after a robust Q2. Q4 growth likely further softened, sliding back to the “new normal” levels. 2.6% is on the cards. It is important to note that the US is doing better than the rest of the developed world.
- Chinese Caixin Manufacturing PMI: Friday, 1:45. This independent, forward-looking gauge for the world’s second-largest economy is closely watched. Back in January, it dropped to 48.3, indicating contraction in the manufacturing sector.
- Euro-zone inflation: Friday, 10:00. Inflation is slowing down in the euro area, with a drop to 1.4% in January. Core inflation ticked up from 1% to 1.1% y/y. Similar figures are likely in the preliminary report for February.
- Canadian GDP: Friday, 13:30. Canada is unique in publishing GDP figures once a month. The high frequency means that not every release is that impactful, but this one is different, for December, concluding the fourth quarter. The economy shrank by 0.1% in November and an increase may be seen now.
- US ISM Manufacturing PMI: Friday, 15:00. The indicators serve as a hint to the Non-Farm Payrolls report published the following week.
*All times are GMT
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