The Chicago Federal Reserve’s National Activity Index for February will be under scrutiny today. After last week’s downbeat economic outlook from Federal Reserve Chief Jerome Powell, the market is expecting to see a meaningful uptick. January’s print of -0.43 is expected to be reversed into expansion of +0.30 and this is the sort of news that could readily provide some support for the US Dollar.
Gfk German Consumer Confidence is set for publication this morning. This number has been resilient in recent months, belying reported weakness across the Eurozone. A print of 10.5 is forecast for April, only slightly lower than the 10.8 reported for March. Given the forward-looking nature of this print, a reading of that magnitude would be unlikely to make much of an impression on the Euro.
French jobless claims are due for release today, and expectations are that this number may provide some fresh optimism for the Eurozone. After a 5,200 decline in the unemployment reading in January, the number is forecast to contract by a further 32,000 in February. Opinions are divided as to just how bad the Eurozone economic slowdown is right now. Some cause for cheer here would have the potential to see the Euro climb as a result.
January’s US Balance of Trade data is scheduled for publication and expectations are for little change over December’s $59.8billion deficit. With that in mind, January’s durable goods order data which was released two weeks ago did show a meaningful month-on-month improvement. Any emerging exporting bias could impress, with the increased demand for US Dollars lending support to the currency.
Eurozone Business Confidence for March is set for release, with a sharp month-on-month decline being forecast. A print of just 0.25, down from February’s 0.69 is expected, making for the lowest reading in over two years and highlighting the underlying weakness that’s building in the Eurozone right now. Clearly, that would be at odds with any potential improvement in the French employment situation but would serve to affirm views that the European Central Bank (ECB) may yet need to restart its quantitative easing program if it is to steer the economy away from recession.
March’s German inflation print is also on the slate for today, with a forecast of just 1.4% being suggested, down from last month’s 1.5%. Last week, Angela Merkel suggested to a public forum that inflation would soon be approaching the 2.0% level where the ECB could start thinking about increasing interest rates. This reading looks set to contrast sharply with that assessment and could leave the Euro under pressure after recent gains.
The final UK Gross Domestic Product (GDP) reading for the fourth quarter of 2018 will be published this morning. After the Q3 print of 0.6%, a 0.2% decline is forecast, although critically this is in positive territory. Two successive quarters of negative GDP prints constitute a technical recession, so anything worse than forecast is likely to heap pressure on an already volatile Pound.
The influential Chicago Purchasing Managers’ Index (PMI) print for March will be released, with a sharp downturn from February’s 64.7. With analysts suggesting a reading as low as 55.0, this would be the worst result in over two years and would serve to underline the cautious approach to monetary policy which was highlighted by the Federal Reserve last week. The number should be above the break-even 50.0 mark, but there may be some concern over the pace of the decline which could translate into US Dollar weakness.