The Week Ahead – Central Banks, U.S Nonfarms, and Geopolitics in Focus

On the Macro

It’s a particularly busy week ahead on the economic calendar, with 80 stats due out through the week ending 4^th March. In the week prior, 57 stats had been in focus.

For the Dollar:

ISM Manufacturing and Non-manufacturing PMI, ADP nonfarm employment change, and initial jobless claims will draw attention Monday through Thursday.

Friday’s nonfarm payroll figures for February will be the key driver, however.

Away from the economic calendar, geopolitical news will also provide direction. Hopes of the FED hitting pause on rate hikes weighed on the Dollar on Friday.

With geopolitics in focus, U.S President Joe Biden’s State of the Union Speech will also draw interest after the U.S market close on Monday. Following Biden will be FED Chair Powell, who is due to give testimony on Wednesday and Thursday.

In the week ending 25^th February, the Dollar Spot Index rose by 0.55% to 96.615.

For the EUR:

Private sector PMIs for Italy and Spain and finalized PMIs for France, Germany, and the Eurozone will draw interest. Expect the Eurozone’s PMIs to have more influence.

German retail sales, unemployment, and trade data will also draw plenty of interest.

On the monetary policy front, the ECB meeting minutes are due out on Thursday. The impact may be less than normal, however. In response to the Russia invasion of Ukraine, the ECB stated that it is carrying out an impact analysis and will do what is needed to deliver on its mandate.

For the week, the EUR fell by 0.72% to $1.1268.

For the Pound:

Finalized private sector PMIs for February will be in focus. The markets will be looking for any revisions to the services PMI.

The Pound slid by 1.14% to end the week at $1.3409.

For the Loonie:

4^th quarter GDP numbers are due out early in the week. The Bank of Canada monetary policy decision will be the main event. The markets will get a sense of how central banks are likely to respond to Russia’s invasion of Ukraine.

The Loonie ended the week up 0.19% to C$1.2713 against the U.S Dollar.

From the Asia Pacific

For the Aussie Dollar:

Retail sales, 4^th quarter GDP, and trade data will draw interest in the week. We expect the retail sales figures to have a more marked impact on the Aussie Dollar.

Away from the numbers, Tuesday’s RBA monetary policy decision and forward guidance will be the main event of the week.

The Aussie Dollar rallied by 1.25% to $0.7226.

For the Kiwi Dollar:

It’s a quiet week ahead, with stats limited to business confidence figures. While the number will draw interest, market risk sentiment and economic data from China will also provide direction.

The Kiwi Dollar ended the week up by 1.38% to $0.6743.

For the Japanese Yen:

Industrial production, retail sales, and 4^th quarter capital spending figures are due from Japan. Expect the industrial production numbers and retail sales figures to have more impact.

The Japanese Yen fell by 0.11% to end the week at ¥115.550 against the U.S Dollar.

Out of China

NBS and Caixin private sector PMIs for February will be in focus. Expect the Caixin survey-based figures to have a more significant impact on the global financial markets.

In the week ending 25^th February, the Yuan rose by 0.58% to end the week at 6.3175 against the Dollar.

Geo-Politics

Russia and Ukraine will remain the area of focus in the week ahead, which could overshadow economic data and central bank chatter once more.