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The US dollar had a mixed week amid hopes for peace in the Korean peninsula, fears of trade wars and also a mixed jobs report. What’s next?. Markets will be digesting the latest news from a busy week before focusing on US inflation.   Here are the highlights for the upcoming week.

The US Non-Farm Payrolls was mixed: no less than 313K jobs were gained, but wage growth retreated to 2.6% y/y, a significant setback. The Fed is still likely to upgrade its dot-plot in the March meeting, but the path may be more complicated, not only by wages but also because of trade fears. The Canadian dollar moved on any twist in the tariff story, especially as the BOC raised deeper concerns about it. Trump’s tariffs topped the headlines and scared markets, but when Canada and Mexico were exempted, things somewhat calmed down. North Korea is reportedly willing to abandon its nuclear weapons in return for guarantees for its regime. The groundbreaking news sent the safe haven yen and the dollar down. In the euro-zone, the inconclusive Italian elections initially hurt the euro but were then forgotten. Germany finally has a government and that helped the common currency. The pound struggled with worries about Brexit and Australia with a slightly disappointing GDP figure.

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  1. US inflation: Tuesday, 12:30. In January, wages and inflation came out better than expected, elevating the chances of more rate hikes. We already know that wages fell back in February. Did inflation follow? This is the big question. Core CPI is expected to remain unchanged at 1.8% y/y and rise by 0.2% m/m after 0.3% beforehand. Inflation was the missing piece for a long time and it still isn’t heating up too fast.
  2. Mario Draghi talks Wednesday, 8:00. The President of the ECB managed to push down the euro with his dovish downplay of the small hawkish shift the ECB made to its statement. He will have another chance to move markets when speaking in Frankfurt. He will speak at the  Institute for Monetary and Financial Stability, so he may refer to monetary policy.
  3. US retail sales: Wednesday, 12:30. Last time, the retail sales report for January was overshadowed by the inflation figures. This time it has the full stage to its own. After the headline dropped in January by 0.3%, an increase of 0.3% is expected in February. Core sales are projected to rise by 0.3% as well after staying flat last time.
  4. US PPI: Tuesday, 12:30. Producer prices are overshadowed by the other figures, but may still be of interest. Headline PPI is forecast to rise by 0.1% after 0.4% last time. Core PPI carries expectations for +0.2% after 0.4% in January.
  5. New Zealand GDP: Wednesday, 21:45. New Zealand published its Gross Domestic Product only once, making the publication important. An acceleration in growth is expected in Q4: 0.8% after 0.6% in Q3. The economy is dependent on trade and the recent tariff talk had a significant influence on the currency.
  6. Swiss rate decision: Thursday, 8:30. The Swiss National Bank shocked the world when it abandoned the peg in January 2015. Since then, the SNB maintained its negative deposit rate of -0.75% and pledges to intervene in currency markets whenever necessary. In the quarterly Libor Rate Decision, the team led by Thomas Jordan is unlikely to stray from that path in this decision. The Swiss franc has recently attracted safe-haven flows, but the moves have probably not caused too many worries for the SNB, especially as things calmed down afterward.
  7. US housing data: Friday, 12:30. Building permits and housing starts may go in different directions, offsetting each other and not triggering any market movement. But, when they move in the same direction, the dollar tends to react. Building permits are expected to drop from 1.38 million annualized to 1.33 million. Housing starts carry expectations for a slide from 1.33 million to 1.30 million.
  8. US consumer confidence: Friday, 14:00. The last word of the week belongs to the University of Michigan’s Consumer Sentiment. The final read for February came out at 99.7 points and the preliminary print for March carries expectations for a score of 99.6 points.

*All times are GMT

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