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The following article is based on research by Marshall Gittler, Head of Investment Research for FXPRIMUS.
FXPRIMUS Indicators and events for week beginning 20 Feb: Eurogroup meeting, FOMC minutes, preliminary PMIs
Again, it’s a relatively quiet week for indicators and no major central bank meetings scheduled. The preliminary global PMIs from the Eurozone and the US will be the focus for data, while the minutes of the February FOMC meeting will be the main monetary event. There are an unusual number of important speeches and data related to Australia this week.
It looked as if the key event would be today (Monday), when the Eurogroup of EU finance ministers meet to discuss aid to Greece. This was their last chance to reach an agreement on the terms of the Greek bailout program with the IMF and release €7bn in IMF aid to Greece, but it just doesn’t look like it will happen. The Greek debt question is therefore “live” again and may exert downward pressure on the euro.
The FOMC minutes on Wednesday could rekindle expectations of Fed tightening. Actually though these expectations have been quite volatile lately as there seems to be a split on the committee. The minutes may reflect that split, in which case it’s hard to guess ahead of time how they will affect the market. It probably depends on whether the market is in a mood to buy or sell dollars.
The main indicators out this week will be the preliminary PMIs for the main Eurozone countries and the US. The manufacturing PMIs are expected to come down slightly, but that wouldn’t necessarily be worrisome as growth last month rose to its fastest pace for nearly two years. Thus I would expect a small decline in the PMIs not to have much impact on risk sentiment or views on currencies.
For the UK, the main event will be on Tuesday, when Bank of England Gov. Carney, BoE Chief Economist Andy Haldane, and two members of the Monetary Policy Committee speak at a Treasury Select Committee hearing on the February Inflation Report. That report was slightly more dovish than people had expected and GBP fell after it came out. They are likely to repeat the same message here and the pound could fall again, unless perennial hawk Ian McCafferty says something to give the market mixed signals.
Other key indicators coming out this week including the Ifo survey on Wednesday. For the US, it’s existing home sales on Wednesday and new home sales on Friday. And Canada announces its retail sales on Wednesday and CPI on Friday.
Finally, it’s a relatively big week for the AUD as the minutes of the February RBA meeting are released on Tuesday Australia time, while RBA Gov. Lowe speaks on Wednesday and Friday Australia time. Also the quarterly private capital expenditure figures will be released on Thursday. My guess is that Gov. Lowe will be relatively optimistic and the AUD could gain over the week.