The U.S. dollar and yen finished the week lower because of strong risk appetite. Some kind of optimism prevailed as regards US-China trade negotiations. Talks are expected to continue into the weekend and this might cause more market volatility in the upcoming week.
The AUD and the NZD both close the week at their weakest levels despite positive risk sentiments. On the other hand, the GBP closed at its strongest level as the risk of no-deal Brexit faded. Meanwhile, the loonie followed the oil prices to hit higher levels.
The key releases scheduled for the upcoming week include the GDP data and ISM Manufacturing PMI from the U.S., among those from elsewhere in the world. Here is a brief outlook on a few important economic data scheduled to be released next week:
#1: New Zealand Retail Sales (02/24/2019 Sunday 21:45 GMT)
In New Zealand, retail remained stagnant during the third quarter of last year after registering a gain of 1.1 percent in the prior quarter. The reading for the quarter came in well below analysts’ expectations of a 1.0 percent increase in retail sales. Department stores recorded the largest increase. It was followed by electrical and electronic goods sector. Fuel sales rebounded 0.5 percent after four consecutive declines. However, retail sales declined in sectors such as hardware, building, and garden supplies, and food and beverage services. Forecast for the December quarter of 2018: an increase of 0.5 percent is on the cards
#2: U.K. BoE Governor Mark Carney Speaks (02/25/2019 Monday 10:00 GMT)
Mark Carney, Governor of the Bank of England, is scheduled to hold a press conference in London. Markets often remain volatile during his speeches. This is because traders make an attempt to understand the direction of interest rates.
#3: U.K. Inflation Report Hearings (02/26/2019 Tuesday 10:00 GMT)
The Governor of the Bank of England and MPC members testify on a quarterly basis before the Treasury Committee of the Parliament on economic outlook and inflation. The hearings last for a few hours and often create heavy market volatility. This is because of the direct comments made as regards the currency markets. Traders care because the MPC members vote for setting the country’s key interest rates. Further, they drop subtle hints as regards the future of the monetary policy during their public engagements.
#4: U.S. CB Consumer Confidence (02/26/2019 Tuesday 15:00 GMT)
In the U.S., the Conference Board’s consumer confidence index slumped in the month of January to the lowest level ever since July 2017 as a result of a drop in economic optimism following the longest-ever government shutdown. The index fell to the 120.2 level from the 126.6 level in the previous month. The reading for the month missed analysts’ expectations that the reading would come in at the 124.0 level. While the measure that gauged consumer expectations fell to its weakest level since October 2016, the view of Americans on present conditions dropped for the second month. Forecast for February 2019: 124.3
#5: U.S. Fed Chair Jerome Powell Testifies (02/26/2019 Tuesday 15:00 GMT)
Jerome Powell, Fed Chair, is scheduled to testify before the Senate Banking Committee on the Semiannual Monetary Policy Report in Washington DC. The testimony is generally provided in two parts. In the first part, the Fed Chair reads out a prepared statement. The Senate Banking Committee holds a question and answers session in the second part. As the questions do not get revealed beforehand, they often call for unscripted answers. This leads to heavy volatility in the currency market.
#6: Canada CPI (02/27/2019 Wednesday 13:30 GMT)
In Canada, inflation declined by 0.10 percent on a month-on-month basis in the month of December last year. Forecast for January 2019: inflation is expected to increase by 0.2 percent
#7: U.S. Fed Chair Jerome Powell Testifies (02/27/2019 Wednesday 15:00 GMT)
Jerome Powell, Federal Reserve Chair, is scheduled to testify before the House Financial Services Committee in Washington DC on the Semiannual Monetary Policy Report. The testimony is usually provided in two parts. In the first part, he reads out a prepared statement. The second part is a question-answer session. As the questions are not revealed beforehand, it can lead to unscripted answers. This causes heavy market volatility.
#8: New Zealand ANZ Business Confidence (02/28/2019 Thursday 00:00 GMT)
In New Zealand, the ANZ Business Confidence Index rose to the highest level in eight months and touched the -24.1 level in December, up from the -37.1 level in the previous month. Even the latest reading continues to suggest that firms remain pessimistic as regards any improvement in their perceptions about the activity. Further, the gauge that measures exports rose from 8.3 to 14.9 and the employment index increased from 2.2 to 7.4. In the meantime, inflation expectations edged lower from 2.29 to 2.15, interest rates declined from 28.1 to 17.5, and pricing intentions fell from 28.2 to 23.9.
#9: Australia Private Capital Expenditure (02/28/2019 Thursday 00:30 GMT)
In Australia, private capital expenditure fell 0.5 percent on a quarter-on-quarter basis in the third quarter of last year after the reading for the prior year was revised downward to a decline of 0.9 percent. The reading for the month missed analysts’ expectations for an increase of 1.0 percent. Private capital expenditure declined for the third time ever since the final quarter of 2016. The fall in expenditure on structure and buildings was more than the increase in expenditure on plant, machinery, and equipment. Forecast for the final quarter of 2018: an increase of 1.1 percent is on the cards
#10: U.S. Advance GDP (02/28/2019 Thursday 13:30 GMT)
In the U.S., GDP grew at an annualized rate of 3.4 percent on a quarter-on-quarter basis in the September quarter of last year, slightly lower than the earlier estimate of a 3.5 percent expansion. This follows a 4.2 percent growth in the prior period, the highest reading ever since the September quarter of 2014. Exports and Personal consumption expenditures were revised down, while the private inventory investment was increased. Forecast for the final quarter of 2018: America’s economy is expected to expand by 2.6 percent
#11: U.S. Fed Chair Jerome Powell Speaks (03/01/2019 Friday 01:15 GMT)
Jerome Powell, Federal Reserve Chair, is scheduled to deliver a speech on the topic “Recent Economic Developments and Longer-Term Challenges” in New York at the Citizens Budget Commission Awards Dinner. Markets often remain volatile during his speeches. This is because traders make an attempt to understand the direction of interest rates.
#12: Canada GDP (03/01/2019 Friday 13:30 GMT)
Canada’s GDP shrank 0.1 percent on a month-over-month basis in November last year, following the 0.3 percent expansion in the prior month. The reading for the month was in line with analysts’ expectations. Wholesale trade, finance and insurance, manufacturing, construction, transportation and warehousing, retail trade, and quarrying, oil and gas extraction, and mining dropped. Thirteen out of the 20 industrial sectors recorded gains. They included accommodation and food services, professional services, utilities, and public sector. Forecast for the month of December 2018: GDP growth is expected to remain flat
#13: U.S. ISM Manufacturing PMI (03/01/2019 Friday 15:00 GMT)
In the U.S., manufacturing activity bounced back in the month of January with the ISM manufacturing PMI rising to the 56.6 level from the reading of 54.3 in December last year. New Orders Index came in at 58.2 percent, but New Export Orders slipped 1.0 percent. The strong start for the New Year will dispel fears of any recession for the time being. Forecast for February 2019: 56.6