The week starts with Sterling on the back foot as it is reported that the Prime Minister Theresa May is preparing for a potential Scottish independence referendum. It is believed that the PM could agree to a new referendum for Scotland to seek independence, only on the condition that it does so after the UK leaves the EU. As the House of Lords kicks off today examining the Brexit bill, the Pound has already dropped against its major peers.
The US dominates on the data front today as the US monthly Durable Goods Orders hits the wires this afternoon. The gauge is forecasted to show a jump up in orders to 1.6% from the previous negative reading last month. If this is as positive as expected it could again have investors gaining confidence in the US economy and see the Dollar strengthen.
The second month of the year ends with attention focused on the US. The United States second reading of Q4’s economic growth is expected to show a slight upward revision to 2.1%. If a positive revision is posted this could spur investment into the Greenback. Later in the afternoon, an insight into the all-important Consumer Confidence is released from the States. Confidence is anticipated to remain in line with last month’s reading.
Manufacturing data is released from all over the world on Wednesday, starting with China, the world’s second largest economy, in the early hours of the morning. China’s manufacturing data is due to remain consistent with last months and stay in expansion territory.
Germany, France, Italy and Spain all post their PMI figures, followed by the overall manufacturing PMI reading from the Eurozone, where it is forecasted to hold steady at 55.5. The UK is to post shortly after followed by the US in the afternoon, both expected to stay at the figures which were seen last month.
Wednesday also sees US President Donald Trump talking from Washington, where he is due to outline healthcare reform policies. As we have already witnessed, Trump’s speeches can cause volatility for the Dollar.
After a year of the European Central Bank having to combat deflationary pressures the latest yearly inflation figure is released on Thursday. The figure is expected to remain at 1.8%, supporting the actions of the ECB and could see an increase of noise from the markets that QE needs to be tapered. The only other piece of data released is the UK’s Construction PMI which is expected to remain in expansion territory.
The week ends with a host of Service PMI data being released, with the main Services gauge being the UK’s main contributor to the UK economy. Expectations are for this sector to stay in expansion territory at 54.2 but slightly down from the previous reading of 54.5. Fed Chair Janet Yellen speaks later in the evening on the outlook of the US economy. Markets will look for any insight that may be given as to when the first rate increase of 2017 could be.