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The Week Ahead!
By Mike Conlon | March 15, 2010
Not much happening today except the Empire Manufacturing number and Euro zone employment figures. There is speculation in the market that the Greek Tragedy will not be voted on at the 2-day EU meeting, making today’s theme risk-aversion to start the day.
Tomorrow will be the wrap up of the second day of meetings of EU finance ministers as well as the US FOMC meeting in the afternoon. Euro zone CPI figures will be reported. Japan is also expected to announce their rate decision in the overnight session.
On Wednesday news will be dominated by the UK, as jobless claims and the unemployment rate figures are due. PPI figures in the US will also be reported, which could give a hint to how we are doing on the inflation front. Considering this comes a day AFTER the FOMC, I wouldn’t expect this to matter that much to the market.
Thursday, we get US CPI figures, which could have a major impact if the numbers are hotter than expected. Depending on what the FOMC says on Tuesday, these figures could be in direct opposition to policy and could increase the chatter for higher rates in the US. We’re also going to get initial jobless claims, which could add fuel to the fire.
On Friday, Canadian CPI figures and retail sales figures come out which could put increased pressure on the Bank of Canada to raise interest rates. The Canadian economy seems poised for the move as all signs are pointing to economic recovery.
In currencies this morning:
Aussie (AUD): There is no major news due out for the Aussie this week so expect it to trade on overall risk themes. Things are starting to heat up in the China-US currency situation so this could have an impact on global risk and Chinese exports. This could affect Aussie strength. And while nothing is expected to happen this week, traders may start positioning themselves accordingly.
Kiwi (NZD): Like its big brother the Aussie, expect the Kiki to trade on risk themes as well. We are going to get New Zealand’s Consumer Confidence figures on Wednesday which could show how the domestic economy is doing. Should a worse than expected reading come in, then we could see some Kiwi weakness.
Loonie (CAD): This is an important week for the Loonie as the CPI and retail sales figures are due out on Friday. There has been much speculation in the market that the BOC will need to move higher on rates then the July timeline put forth by Governor Carney. Should these figures coming in hotter (higher) than expected, look for market to push the Loonie closer to parity with the US dollar.
Euro (EUR): Overnight, Euro zone unemployment figures came in a little worse than expected and today marks the start of a 2-day meeting of EU finance ministers. Early word is that they will not be deciding on an aid package for Greece, which has increased the uncertainty and heightened risk in the market. CPI figures are expected tomorrow but I can’t foresee them being higher, so there should be minimal impact to the market.
Pound (GBP): The Pound is paring back gains from last week and sits just above 1.50 vs. USD as news is re-surfacing about the potential for a hung Parliament as a result of the next elections. On Wednesday we’ll get an idea of the economy is doing as jobless claims and the Bank of England policy meeting minutes will be revealed.
Dollar (USD): The Dollar is higher this morning, despite the fact that Moody’s rating agency is saying that the US and the UK are “moving closer to losing their AAA credit ratings”. I guess Moody’s doesn’t mind becoming the target of government investigations. Just kidding. This morning the Empire manufacturing numbers came in ever-so-slightly higher than the expectation, which is good news as the number is not worse. Tomorrow is the FOMC meeting, and while they are not expected to move on rates, listen for the change of “extended period” language. Wednesday is PPI figures, and Thursday is CPI figures. I would think it would make more sense to have those figures reported BEFORE the FOMC meeting, but what do I know. At this point, why should anyone think that the Fed would care about possible inflation!
Yen (JPY): Don’t look for Japan to tighten policy at this week’s meeting. In fact, look for just the opposite. The yen could weaken further against the Dollar if risk themes do not undermine BOJ resolve to further weaken the Yen to encourage exports.
So there’s a lot going on this week, and it will be interesting to see the difference between perception and reality. Perception is what the policy meetings attempt to tell us, reality is what the price index numbers tell us.
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Topics: What To Look At In The Market | 1 Comment »
March 26th, 2010 at 11:44 am
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