By Deepta Bolaky
Geopolitics and Hanoi Summit was the main focus last week which mostly drove the financial markets. Most importantly, the trade deadline has been delayed which brought some relief in the markets. The comments during the weekend from President Trump grasped attention and set an interesting start for the week.
The new month kicks in with central bank meetings throughout the week. We will see the RBA releasing its interest rate decision and rate statement on Tuesday followed by the Governor Lowe Speech on Wednesday. We recently saw a more neutral approach from the RBA due to the rising global risks. Market participants are expecting the central bank to keep interest rate steady at 1.5%. However, investors will be scrutinising the tone and language of the RBA to see if it reflects the latest commentaries that have sent the Australian dollar to the downside.
It is also a packed week on the data front for Australia:
Given the recent tilt in tone and the growth downgrades by the RBA, the Australian Dollar may struggle to find upside momentum amid a hectic week of domestic economic events that are poised to show further slowdown. However, buyers may rely on positive headlines from the US/China trade talks or the strong US dollar comment from President Trump.
The BoC rate decision will drop in on Wednesday. Similarly, we expect the bank to keep interest rate unchanged at 1.75%. The global slowdown is forcing most central banks of major economies to pause and become data-dependent. Even though the trade tensions with the US has been resolved, there are other headwinds that are overshadowing the economy.
We will also see a few mid and top-tier data for Canada on Wednesday and Friday:
With a slew of reports on the labour market, the wages data will stand out. We saw hourly wages declining sharply since June 2018 but appear to have bottomed out as from November. Traders will be looking for fresh figures to see if the recent pick-up is sustainable.
The ECB will probably move markets more among the other central bank meetings this week. The interest rate decision on Thursday will be followed by a momentary policy statement and press conference. The central bank had recently highlighted the risks to its economy:
“The risks surrounding the euro area growth outlook had moved to the downside, as the persistence of uncertainties related to geopolitical factors and the threat of protectionism, vulnerabilities in emerging markets and financial market volatility was increasingly weighing on economic sentiment.”
We saw some improvement in the German data that came above expectations. Investors will monitor if there are any downgrades for inflation and growth. Other notable economic events for the Eurozone economy are the Markit PMI Composite, and Retail Sales on Tuesday followed by Gross Domestic Product. In Germany, factory orders will be released on Friday.
Amid a packed-economic calendar for the US, the most important data will be the Nonfarm payroll which is usually a big market-mover. Nonfarm payroll surprised in January with an addition of 304k. Jobs report have been strong throughout the year 2018 and investors will await this week’s releases to see whether job growth has reached its peak while wage growth continues to be robust.
Attention will also be on the housing sector which is showing some sign of weakness. Traders will monitor the data to identify if the weakness persists.
Monday: Markit PMI (Composite and Services), ISM Non-Manufacturing PMI, New Home Sales and Monthly Budget Statement
|Tuesday, 05 March 2019
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