The Week Ahead – Economic Indicators and Central Banks in Focus

On the Macro

It’s a busy week ahead on the economic calendar.

After the latest US inflation numbers and hawkish Fed chatter, it will be another pivotal week as February comes to a rapid end.

For the Dollar:

Core durable goods orders for January will draw interest at the start of the week. However, the numbers will likely have a muted impact on the dollar, with the latest inflation numbers likely to force the Fed into more aggressive policy moves.

On Tuesday, consumer confidence numbers will influence ahead of ISM Manufacturing PMI numbers on Wednesday.

With US labor market conditions a Fed focal point, jobless claims and unit labor costs will draw interest on Thursday ahead of the all-important ISM Non-Manufacturing PMI out on Friday.

Tighter labor market conditions, a pickup in consumer confidence, and an acceleration in service sector activity could put 75-basis point rate hikes onto the table.

Beyond the stats, investors need to monitor FOMC member chatter, with the markets expecting a further reaction to the latest stats.

For the EUR:

It’s another busy week on the economic data front for the EUR.

On Monday, business and consumer survey index numbers will draw investor interest along with consumer inflation expectation numbers. The ECB will be looking for improving consumer sentiment and a fall in inflation expectations to support the more optimistic economic outlook.

The French economy will be in focus on Tuesday, with inflation and Q4 GDP numbers due. Weaker GDP numbers would test the EUR/USD following the weaker-than-expected German GDP figures.

German retail sales and unemployment figures will accompany manufacturing PMI numbers for euro area member states and the Eurozone on Wednesday, with prelim inflation numbers for Germany also due out.

On Thursday, prelim euro area inflation figures for February will draw plenty of interest ahead of services PMIs on Friday.

The ECB will also be in the spotlight, with the ECB releasing its monetary policy meeting minutes on Thursday. Investors should also monitor ECB Executive Board member speeches, with Chief Economist Philip Lane getting things started on Monday.

For the Pound:

It’s a relatively quiet week ahead on the economic calendar for the pound. Finalized private sector PMI numbers will draw interest on Wednesday and Friday. We expect revisions to the services PMI to have more influence.

However, while the stats will provide direction, Bank of England commentary will likely be the key driver. Better-than-expected prelim private sector PMI numbers for February eased bets of a dovish BoE monetary policy stance.

Bank of England Governor Andrew Bailey will speak on Wednesday, with Chief Economist Huw Pill in focus on Tuesday and Thursday. Monetary policy committee members Broadbent, Cunliffe, and Mann are also due to deliver speeches.

For the Loonie:

It’s a quiet week ahead on the economic calendar for the Loonie. On Tuesday, Q4 GDP numbers will draw interest ahead of labor productivity numbers on Friday. While we expect the GDP numbers to have more influence, PMI data from China and sentiment toward central bank monetary policy will likely be the focal points for the Loonie.

Out of Asia

For the Aussie Dollar:

It’s a busy week ahead for the Aussie Dollar. Q4 company gross operating profits kick start the week.

However, retail sales numbers on Tuesday and inflation and Q4 GDP figures on Wednesday will likely be the key stats of the week. Weaker-than-expected numbers could further ease pressure on the RBA.

Other stats include private sector credit, building approval, and home loan figures. However, these are unlikely to have a material impact on RBA monetary policy or the Aussie Dollar.

For the Kiwi Dollar:

It’s a quiet week ahead for the Kiwi Dollar.

Retail sales figures for Q4 will draw interest on Monday, ahead of business confidence numbers on Tuesday. We expect both sets of numbers to influence, with no other stats for investors to consider in the week.

For the Japanese Yen:

It is a busier week ahead for the Japanese Yen. On Tuesday, industrial production and retail sales will be in focus, with retail sales likely to trump industrial production. On Thursday, the investor focus will shift to capital spending ahead of February inflation and finalized services PMI numbers on Friday.

We expect the retail sales and inflation figures to have more influence on the Japanese Yen. However, investors should also track Bank of Japan Board member commentary following incoming Bank of Japan Governor Kazuo Ueda’s comments last week.

Out of China

Private sector PMIs for February will be in the spotlight. Investors expect a sharp rebound in private sector activity following Beijing’s shift in zero-COVID policy. While the NBS numbers will draw interest, the Caixin Manufacturing PMI (Wed) and Caixin Services PMI (Fri) will have more impact on market risk sentiment.

Geo-Politics and Brexit

Russia and the war in Ukraine will continue to be a focal point along with Russia-China ties.

For the UK and the British Pound, Brexit will be an area of focus. An agreement on the Ireland Protocol should deliver Pound support.