Merkel struggles to form coalition government
The Greenback was provided with a much needed boosted on Friday as the US Labour Data posted better than expected. The Non-Farm Payroll figure showed an additional 200k jobs were added to the US in January. The figure beat the markets expectations of 181k. Average Hourly Earnings also beat expectations to post a bullish 0.3%. Unemployment remained at a 16 year low of 4.1%. The bullish Labour Data figures will provide further support for the Fed to raise rates again in the coming months. The markets expect to see the first rate hike of the year at the next FOMC meeting in March.
German Chancellor, Angela Merkel has struggled to form a coalition Government with the Social Democrats within the time limit she set for herself. Sunday was her targeted date, however they have been unable to come to an agreement on some outstanding issues, such as healthcare. Talks are to start again today and it is believed the two sides should be able to come to an agreement, which will then be put to a vote by the Social Democrats.
Today will start with the UK releasing the final January PMI. The Services PMI is expected to post 54.1. Across the pond, the US are scheduled to release the ISM Non-Manufacturing PMI forecast to post higher than the previous reading, at 56.5. ECB President, Mario Draghi will be testifying before on the European Parliament on the ECB’s annual report.
Australia will be releasing the Reserve Bank of Australia rate statement as well as their rate decision on Tuesday. They are expected to keep rates on hold as inflation has posted weaker than expected lately, despite the strong growth and improving job market. The US will be releasing the JOLTS job openings, which is expected to increase slightly to post 5.95m.
Wednesday will be a quiet day of the week, as the markets await the Bank of England policy release on Thursday. Across the pond, two FOMC members, William Dudley and John Williams are scheduled to speak. Dudley will be speaking about banking culture at an event by the European American Chambers of Commerce. Williams will be speaking at a community leaders luncheon in Honolulu.
The main focus on Thursday will be the Bank of England as they release the bank rate decision, monetary policy and the inflation report. The BOE are not expected to raise rates having raised them for the first time in 10 years back in November, however the markets will be focusing on any hints as to when the next rate hike will likely be. Also published will be the inflation letter to the Chancellor of the Exchequer and the inflation report.
Friday sees a quiet end to the week with no high tier data on the economic docket. The UK will be releasing the Manufacturing Production figure, expected to post 0.3%, whilst MPC member, Jon Cunliffe will be speaking at the 2018 Asset Management Derivatives Forum. Canada will be releasing the Unemployment Rate for January, which is expected to uptick to 5.8%. The Employment Change figure is also scheduled to be released which is forecast to drop to -2k.