UK growth, US inflation, and monetary policy in focus

  • Wednesday - European Central Bank (ECB) monetary policy decision. This could include details of new long-term loans to Eurozone banks.
  • Wednesday - European Council emergency Brexit summit, which has the potential to dictate whether the UK will be granted an extension to Article 50.
  • Wednesday - UK Gross Domestic Product (GDP) data for February will be released. It risks dipping into negative territory as Brexit concerns bite.

Monday

US Factory Order data for February could provide fresh concern for the Federal Reserve today. After scraping into positive territory for the previous two months, expectations are that this will dip lower once again with a reading of -0.6%. This potential outcome could raise concerns about the proximity of an economic downturn.

Tuesday

February’s Italian Retail Sales reading is due and stands to give an insight into the health of the Eurozone’s third-largest economy. The country’s banks have been increasingly cautious overextending credit to consumers so there’s some expectation that a slowdown may be seen. Forecasts for the month-on-month reading are for a decline from 0.5% to 0.2%.  

The JOLT Job Opening report for February will be published, illustrating the total number of unfilled vacancies in the US at the end of the month. Over the last two decades, this number has averaged around 4.4 million, but reached a peak last November of 7.63 million. A modest decline is expected in this print with forecasts of around 7.1 million, illustrating a significant demand for labour.  Only a large deviation is likely to contribute to central bank policy speculation.

Wednesday

February’s UK GDP reading is set for release and could raise fresh concerns over the impact that Brexit uncertainty is having on the country’s economy. The three-month average is forecast to hit a nine-month low of just 0.1%, while a reading in negative territory would suggest the UK is on the brink of slipping into a recession. Brexit developments will dominate Sterling, but a print below forecast would likely hit the Pound.

The European Central Bank concludes its latest monetary policy meeting today. There’s no expectation of any change in policy, but markets will be looking for further details over the planned round of long-term bank loans to redress the challenge of operating in a negative interest rate environment. The pressure is on the ECB to act, and the Euro will be the barometer of that judgement.

The US Inflation Rate for March will be published today and is expected to show an uptick, something which would provide the US Dollar with a little respite from the downside pressure it has been experiencing lately. Forecasts are for 1.8%, an increase on last month’s 1.5%.  A rising figure removes some urgency for central bank stimulus and could potentially strengthen the Dollar.

The European Council will meet today in an emergency Brexit summit. There is some speculation that a proposition of a lengthy extension to Article 50 will be offered at this point, regardless of what UK politicians have managed to agree. It could be a volatile day for Sterling.

The Federal Open Market Committee (FOMC) will release its March meeting minutes today. Any indication over its intentions with regard to monetary policy in the coming months can be expected to direct the US Dollar and potentially broader risk appetite.

Thursday

German Inflation for March will be published which is expected to show a decline to 1.3% from the February figure of 1.5%. This would make for the lowest print in almost a year and confirm the manufacturing order weakness from the past week, exerting more downward pressure on the Euro.

Friday

Eurozone Industrial Production data has been contracting since last November, and another negative print for February is expected to be seen today. A reading much worse than January’s -1.1% could again raise fresh concerns that the ECB isn’t acting quickly enough to support economic growth.

Michigan Consumer Sentiment for April will round off the week, with the print set to slide to 97 from last month’s 98.4. There’s already a growing belief that the next move for interest rates in the US could be lower. Consumer inertia, contrary to the underlying employment picture, would suggest bigger issues emerging for the US economy.