Last week, the U.S. politics triggered disagreement across the financial. The bellwether stock market index S&P 500 registered the biggest loss in more than two years. Further, the White House staff reshuffle sent out the moderates on the foreign policy matters after the economics team experienced the same kind of treatment. President Trump is now left with a cadre that encourages his most belligerent tendencies.
Gary Cohn, the top economic advisor, stepped down because of disagreement on tariffs levied by Mr. Trump on aluminum and steel imports. The President slapped tariffs of about $60 billion on China as punishment for allegedly stealing intellectual property. Beijing has promised to counter the act with their duties.
The markets are also worried about the ouster of Rex Tillerson, the Secretary of State, the resignation of H.R. McMaster, the National Security Advisor. John Bolton, former U.N. Ambassador, will replace McMaster. He is the man who advocated preemptive military action against North Korea and Iran.
The U.S. dollar was in two minds with respect to all these developments. At times, the greenback adopted the safe haven role it enacted during the crisis in 2008-09 and rose in spite of the market turmoil. However, the currency’s forays into the positive territory were promptly checked because the markets weighed the probability of a reduction in risk appetite due to the derailment the Fed’s rate increase cycle.
The economic data scheduled for release in the upcoming week are not likely to help greenback resolve this predicament. The final U.S. GDP growth rate for the fourth-quarter of last year is expected to be revised upward to 3.7 percent from 2.5 percent. Further, the Fed’s most favored PCE inflation measure is forecast to hit 1.6 percent in the month of February, the highest level in 11 months. FOMC’s cautious optimism may be reinforced by these outcomes, but they may not have any significant impact otherwise.
#1: U.S. CB Consumer Confidence (03/27/2018 Tuesday 14:00 GMT)
In the U.S., the Conference Board reported the Consumer Confidence Index rose in February, following on the modest increase registered in January. The Index is currently at the 130.8 level, up from January’s 124.3 level. While the Present Situation Index rose to 162.4 from 154.7, the Expectations Index increased to 109.7 in February from 104.0 in January.
Lynn Franco, Director, Economic Indicators, Conference Board said that the consumers favorably assessed current conditions in February driven by the labor force. In spite of the volatility experienced in the recent times in the stock market, consumers have expressed greater optimism as regards short-term prospects for labor market and businesses. They were also somewhat upbeat about their financial prospects. Overall, the consumers are confident that the American economy will continue to expand in the coming months.
Forecast for March 2018: 131.20
#2: New Zealand ANZ Business Confidence (03/28/2018 Wednesday 00:00 GMT)
In New Zealand, the Business Confidence Index improved but remained negative, according to the latest survey carried out by ANZ Bank, indicating that the pessimists continued to outnumber the optimists. The reading for February came in at -19.0, up from -37.8 in the previous month. Further, the activity outlook score rose to 20.4 from 15.6 in the prior month.
#3: U.S. Final GDP (03/28/2018 Wednesday 12:30 GMT)
The second estimate showed that the U.S. economy expanded at an annualized rate of 2.5 percent on a quarter-on-quarter basis in the final quarter of last year. This as below the advance reading of 2.6 percent reported earlier, down from 3.2 percent in the prior period. The data was in line with analysts’ expectation.
The deceleration in GDP growth in the final quarter of last year reflected a reduction in investment in private inventory. This was only partly offset by increases in PCE, exports, government spending (both state and local), federal government spending, nonresidential fixed investment, and residential fixed investment. Imports increased.
Forecast for final GDP figure: 2.7 percent
#4: U.S. Crude Oil Inventories (03/28/2018 Wednesday 14:30 GMT)
In the U.S., crude oil stocks unexpectedly dropped by 2.622 million barrels during the week that ended on March 16, 2018, after increasing by 5.022 million barrels in the prior. Analysts had expected the crude oil stocks to rise by 2.6 million barrels. This is the largest fall in crude oil inventories in as many as nine weeks. Gasoline inventories fell by 1.693 million barrels, following on the slump of 6.271 million barrels reported in the prior week. This is the largest drop in gasoline stocks since September last year. Analysts had expected gasoline stocks drop by 2.008 million barrels.
#5: U.K. Current Account (03/29/2018 Thursday 08:30 GMT)
In the U.K., the current account deficit narrowed to GBP 22.8 billion during the September quarter of last year after the reading for the prior period was revised to a deficit of GBP 25.8 billion. The reading for the third quarter of last year came in above analysts’ expectation for a deficit of GBP 21.2 billion.
The deficit in primary income reduced to GBP 11.4 billion from GBP 13.2 billion because of earnings on overseas investment abroad. The secondary income gap also narrowed to GBP 5.5 billion from GBP 6.4 billion due because of a decline in payments by the government. The trade deficit also narrowed to GBP 5.8 billion from GBP 6.1 billion because of the increase in export of certain services.
Forecast for the fourth quarter of 2017: a deficit of GBP 23.7 billion
#6: Canada GDP (03/29/2018 Thursday 12:30 GMT)
Canada’s economy grew 0.1 percent on a month-over-month basis in December last year, easing from the 0.4 percent expansion seen in the previous month. The growth, however, matched with analysts’ expectation. The service sector expanded by 0.1 percent, following on the 0.3 percent increase in the prior month because of gains in the real estate market, rental and leasing segment, and public sector, finance, and insurance industries. However, the growth goods-producing industries declined by 0.1 percent after registering 1.0 percent expansion in the previous month.