The CORVID-19 outbreak continues to dominate the news, as the virus has paralyzed the global economy and caused a meltdown in the financial markets. Looking ahead, we’ll get a look at manufacturing PMIs in the US., the UK and the eurozone. The UK releases key employment data and the Bank of England holds its scheduled policy meeting.
The week started with a huge rate cut by the Federal Reserve, which lowered rates from 1.25 to 0.25%. The Bank of England and Reserve Bank of Australia also sliced rates, in a coordinated move aimed at stabilizing the global economy. However, the moves failed to stem sharp declines in the financial markets. In the U.S., retail sales declined by 0.5% and the Empire State Manufacturing Index fell by 34.4 points, to -21.5 points. Still, the soft data didn’t stop the dollar from making broad gains, as nervous investors snapped up the safe-haven greenback.
- Eurozone PMIs: Tuesday, 8:15 in France, 8:30 in Germany, and 9:00 for the whole eurozone. The February PMIs showed growth in the services sector, but pointed to contraction in the manufacturing sector. Analysts are braced for very soft readings in March as the COVID-19 outbreak has paralyzed the eurozone economy. Eurozone PMIs are forecast to come in around 40.0 with the French PMI are projected to fall to around 39.5 points. German services PMI is expected in at 43.0 and the manufacturing PMI at 40.1 points.
- UK Manufacturing PMI: Tuesday, 9:30. The PMI came in 51.7 in February, indicative of slight expansion. However, with the CORVID-19 outbreak intensifying, analysts are braced for a contraction in March. The estimate for the initial reading for March stands at 45.7 points.
- UK Services PMI: Tuesday, 9:30. In February, the PMI pointed to expansion, with a reading of 53.2. March is likely to be much weaker as the estimate for the initial reading is 45.0 points.
- U.S. Manufacturing PMI: Tuesday, 13:45. After a string of readings above 50, which separates contraction and expansion, analysts are braced for a sharp slowdown in March, with an estimate of 45.1 points for the initial reading.
- UK Inflation: Wednesday, 9:30. Consumer inflation was unexpectedly strong in January, with a gain of 1.8%, above the estimate of 1.6%. The estimate for February stands at 1.6%. Core CPI, which excludes the most volatile items in CPI, accelerated to 1.6%, above the forecast of 1.5%. The estimate for February is 1.5%.
- BoE Rate Decision: Thursday, 12:00. At this week’s scheduled policy meeting, the bank is projected to maintain the current interest rate and QE levels. Still, the monetary policy summary will be closely watched by investors and could affect the exchange rate.
- U.S. Unemployment Claims: Thursday, 12:30. Unemployment claims jumped to 281 thousand, but the upcoming forecast is a staggering 750 thousand, due to the economic turmoil caused by COVID-19. This release could have a significant impact on the movement of the U.S. dollar.
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