Last week’s UK inflation reading and various comments from the Fed kept markets entertained. Inflation in the U.K. fell to zero for the first time since records began in 1989. Consumer prices in February dropped from 0.3% in January to a new record low of 0%, which was worse than market consensus had forecast and as a result the pound lost ground against the Euro and the Dollar. Fed speakers including Lockhart (a voting member), the slightly hawkish Bullard (non-voting member) and Fed Governor Stanley Fischer gave an insight into the path of US interest rate rise plans.
The main focus for the week will be the Non-Farm Payrolls on Friday which could play a large part in the interest rate “lift off” plans from the Fed and Dollar price action. The UK will be celebrating its Easter holiday on this day but by placing market orders anyone in the UK can still protect themselves from the market swings with a Market Order.
Today much of the focus will be on the promised list of reforms from Greece and whether these are accepted by the Troika and its creditors. If we see any further delay on these then the Euro could weaken as a result. In addition, inflation data is expected from Germany. Meanwhile in the US the PCE will give Fed officials another take on inflation whilst the pending home sale will keep be watched.
Fairly quiet day today but some key readings from the Eurozone will keep the market interested. The degree of the attention will be dependent on the spill over from the Greek announcement on reforms from Monday. The UK current account will not affect the market but could come into play with regards to the election. In the US, consumer confidence is expected to increase slightly.
Key manufacturing data is set for release from across the globe on Wednesday which will be key for global growth moving forward. The ADP employment report will give the market an early indication of the health of labour data ahead of the key non-farm payrolls and unemployment rate on Friday.
It could be an interesting day on Thursday as Germany, Switzerland, the UK and Canada prepare for the extended Easter Holidays (Good Friday and Easter Monday). This will mean higher liquidity and additional volatility. In the meantime the data calendar is quiet with the release of the UK construction data and US jobless weekly claims.
Today could be pivotal in determining whether June is viable or not for an interest rate hike from the US. On Friday FOMC Chairwoman Yellen stated that how important developments in the labour market are in shaping her view on the policy outlook. A positive figure will strengthen the case for an early rate hike in June, a negative reading and this could be pushed out beyond September. Today’s increased liquidity is likely to amplify the small swings caused by the Non-Farms results.