News & Analysis

Week Ahead – Central Banks Minutes

February 18, 2019

By Deepta Bolaky
 @DeeptaGOMarkets

Market Overview

The week had ended on a positive note lifted by the trade headlines on Friday. The US Congress also voted on a spending bill which brought some relief despite the declaration of a national emergency. Risk sentiment buoyed on Friday as investors found some comfort on the trade front and the avoidance of another US government shutdown.

Week Ahead – Central Bank Minutes

Central Bank Minutes

The Reserve Bank of Australia (RBA) and Federal Reserve Bank (Fed) will release their minutes on Tuesday and Wednesday respectively. It will allow investors to have more insights into the different views within the Fed and gauge the heft of the “patient” stance. Similarly, the RBA minutes is expected to bring more clarity on the “neutral” shift for the immediate outlook of interest rates. Governor Philip Lowe speech before the parliamentary committee on Friday will also be in the limelight.

All in all, markets participants will be looking for clues to confirm the extent of the dovish tilt by the policymakers which are expected to bring more volatility to the Australian and the US dollar.

Trade Negotiations

Friday brought more confidence into the financial markets as positive headlines were emerging from the US and China late last week. We saw both sides providing encouraging comments on how well the discussions have progressed so far although much work remains.

We, therefore, expect more news flows this week regarding the details of the trade resolutions while trade talks continue to advance. Stocks have rallied about the potential of a trade deal, and we anticipate the same level of optimism for the start of the week.

Brexit

There may not be any coherent update on the Brexit process which could mean that the Sterling pairs would be less volatile this week. Even though the economic calendar will be quieter compared to last week, the labour report will stand out amid some low-tier data scheduled across the week.

Tuesday will see the Claimant Count Change, ILO Unemployment Rate and Average Earnings. The labour market is tightening, and new figures will help to gauge how it is moving amid Brexit-related uncertainties.

Economic data

  • Tuesday: Alongside the RBA minutes and UK labour report, the ZEW Survey – Economic Sentiment will be released from Germany. It measures the institutional investor sentiment, reflecting the difference between the share of investors that are optimistic and the shares of analysts that are pessimistic.
  • Thursday: It will be a busy day with key releases.

 Australian Labour report will be released early in the Asian session. Unemployment is expected to remain steady at 5% while the economy is predicted to add 15k jobs in January compared to 21.6k recorded in the previous month.

A series of PMI figures will also be released for Germany and the Eurozone area. The recent PMI figures have not been inspiring and pointed towards a situation of sluggishness. A result below 50 is usually seen bearish, and currently, the Manufacturing PMI figures are holding slightly above 50 at 50.5. Investors will also likely keep an eye on the German’s Consumer Prices.

In the US, Jobless Claims, Durable Goods, Existing Home Sales and PMI reports will be due out. The US housing sector has been showing some signs of weakness mostly due to higher mortgage rates. Existing-home sales in the Midwest led the way down with 11.2% drop in the previous report.

 

Tuesday, 19 Feb 2019
Indicative Index Dividends
Dividends are in Points
ASX200 WS30 US500 US2000 NDX100 CAC40 STOXX50
0.869 0 0.204 0.04 0 0 0
ESP35 ITA40 FTSE100 DAX30 HK50 JP225 INDIA50
0 0 0 0 0 0 0

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