Summary:

  • Luis de Guindos’ hearing for the ECB vice president in the afternoon

  • Jerome Powell to testify in Congress on Tuesday and Thursday

  • A pack of data from the US economy to be released this week

Taking a look into macro calendar one can see that we do not have many important readings scheduled for today what is usually the case for Mondays. In the afternoon data concerning new home sales from the US housing market will be released (3:00 pm BST) while in the late evening figures concerning New Zealand’s trade balance will take the stage (9:45 pm BST). When it comes to the central bankers Mario Draghi is scheduled to deliver a speech in Brussels (2:00 pm BST) and Luis de Guindos will speak at hearing for ECB Vice President (4:15 pm BST).

What to watch for the remainder of the week?

Jerome Powell is overtaking the position of Fed Chairman at the very tricky point. On one hand the economy is doing great and a process of policy normalization in the US has long been initiated. However, at the same time he needs to navigate high expectations amid fears that a margin of error could be very thin. Testiomonies in Congress will be like expose for Powell and will be a central point for investors next week. They will also focus on the inflation data from US, Canada and Europe.  

Jerome Powell testifies in Congress (Tuesday 3pm GMT and Thursday 3pm GMT)

To say that Powell could end or extend a bull market on Wall Street on his will could be an overstatement. However, his impact in the first months of his tenure as a head of the Fed will be very important. Investors see solid economy and rising company profits but they also see increasingly higher market interest rates. If the cost of money keeps rising at the pace of the past few weeks equities could lose their shine. Obviously we cannot expect Powell to say “look we have to raise rates 4 times this year” or make any other explicit statement like this. But two days of hearings will provide plenty of opportunities for him to share his views and preferences. Affected markets: TNOTE, US500.

US data: durable orders and consumer confidence (Tuesday), GDP revision (Wednesday), PCE inflation and ISM index (Thursday)

The NFP report is about to be published a week later this month but investors will not complain for data scarcity. CPI reported already showed a pick-up in inflation and now traders will be looking for a confirmation in the PCE report which is crucial for the Fed. When interest rates are on the rise, the worst possible development is economic slowdown so early indicators like Conference Board and ISM should be watched carefully. Affected markets: USDJPY, US30.  

EMU flash inflation data (Wednesday) and Canadian reports (CPI on Tuesday and GDP on Friday)

Flash inflation for February will be released in Germany as soon as Tuesday with the EMU  estimate a day later. This is one of the key reports for the ECB. The Canadian dollar has been under pressure lately, not least because of lower oil prices. Reports on inflation and GDP will play a fundamental role when it comes to hopes for more interest rate hikes. Affected markets: EURUSD, USDCAD. link do file download link

 Will today’s data boost NZD and help NZDUSD break above the resistance zone? Source: xStation5