A light week with Ukraine in the spotlight!
On the economic data front, it will be a light week. But what will still be in the spotlight of investors is the news that will come from Ukraine. Tensions will lead the markets. However, we should not forget about FED speakers, People bank of China, UK Inflation, PMI data from the US, UK, EU, and Germany, with the US Durable goods order and Housing numbers.
PBOC Interest Rate Decision - Monday
The week will start with an important update from the Chinese banking sector. In the past two weeks, most central banks in developed economies were cautious about their decisions, with less than expected dovish policies, as the Russian invasion of Ukraine, increasing the economic growth risks. In China, it may sound different. Probably they can get cheaper Oil and Energy, while inflation unlike other economies still is not the concern there. Therefore we are not expecting any changes in the policies, for now, not towards tightening, or expansionary monetary policy. It should not be positive for the Chinese Yuan.
Wednesday and UK!
Wednesday will be a busy day in London with Producer and Consumer inflation numbers, Raw material Prices index, Annual Budget release, and BoE governor Mr. Bailey’s speech. Inflation is expected to increase by 5.9% in February, and it can put more pressure on BoE policymakers in the next months to increase the rates by another 25 basis points and make history in the continuous process of increasing interest rates. In this situation, Governor Bailey`s comments will be important about these numbers. Anyway, estimated numbers are not expected to support the British Pound.
US New Home Sales - Wednesday
Since the data is for February, as most published data including retail sales were positive and show progress in the construction material sales, both home sales and new home start indexes are expected to increase. On the same day that we will have FED Chair Powell`s speech as well, we are expecting to see a slightly increased in February New home sales, after slipping slightly in January. When you have higher risks in the market, usually demand for lower risky assets including houses will increase. We also should not forget that mortgage rates are still low relative to historical norms, which makes us believe that it must increase the demand for construction and home sales. Estimated numbers can be positive for the US Dollar index.
US Durable Goods Order- Thursday
If we exclude the Boeing report, February orders must increase slightly in line with other data. Boeing reported only 37 new gross orders in February, while they had good orders in March from Delta Airlines. However, February orders were much less than expected and it will drive the overall Durable Goods orders to decrease by -0.50%. Russia`s invasion of Ukraine also will likely create further complications to getting needed materials, therefore next month`s orders also must be lower, and it should not be positive for the US leading indices. Today we have several FED speakers as well and must be watched closely.
Eurozone PMIs - Thursday
After Mrs. Laggard’s speech earlier in the week, the most important event and data in the Eurozone will be the Purchasing Manager`s index, because it will be the first important data, which goes to cover the Russian-Ukraine conflict effects. March PMI data could give us a preview of just how much energy prices rising will affect the manufacturing slowing as a result. We are expecting the manufacturing PMI to move lower in March, while higher energy costs will reduce overall consumption, including services and spending, therefore services PMI will move lower as well. These data will put the Euro more and more under pressure against its crosses.
