This week, markets await several inflation figures and retail sales data in the U.S., inflation figures in Germany, GDP in the UK, and crude oil reports.
Last week marked a significant drop in the Dollar, stronger gold prices, and weaker oil prices, mainly due to the Fed Chairman's testimony and U.S. labor market data. Markets also closed the week with a surprise 10% intraday drop in Nvidia (NVDA) shares after well-known Wall Street analysts expressed concerns about the stock's high trading levels. Nvidia's drop caused the Nasdaq to fall by 1%, while the Dow Jones Industrial Average saw its worst week since October 2023.
Monday: 11/03/2024
Japan published its GDP for Q4 earlier today. The economy expanded by 0.4% YoY and 0.1% QoQ compared to an expected slowdown of 0.4% and 0.1%, respectively. The Japanese economy avoided a technical recession, leading the Japanese Yen to climb to its highest levels in over a month. This expansion increases expectations of the Bank of Japan to exit negative interest rate territory soon.
Tuesday: 04/11/2024
The unemployment rate in Great Britain is due to be released at 11:00 AM GMT+4 (Dubai Time). The data is expected to remain the same at 3.8% YoY in January. If the reading turns out higher than expected, analysts indicate this is usually bearish for the British Pound, and vice versa.
The GBPUSD pair closed Friday on a positive note, breaching the 1.2827 level to reach its highest level since July 26th. The move came amid expectations that the Bank of England will delay its first rate cut until August. In his spring budget, UK Finance Minister Jeremy Hunt also announced a fiscal stimulus of permanent tax cuts of two percentage points, leading to an additional saving of £450 for the average salaried worker in 2024. The most recent OBR projections indicate faster inflation declines and stronger GDP growth in 2024 and 2025.
Germany, the largest economy in the Eurozone, is due to be released at 11:00 AM GMT+4 (Dubai Time). It is expected to have decelerated to 2.5% YoY in February compared to a previous figure of 2.9%, yet still above the 2% target. However, the data is expected to have accelerated MoM from 0.2% to 0.4% during Feb. The Euro has been gaining against the Dollar, with expectations showing that the Fed will start its monetary easing cycle before the ECB. Wage growth in the U.S. has slowed more than expected while unemployment increased, even though non-farm payroll growth surpassed expectations.
OPEC's monthly oil market report, which covers the outlook for crude oil demand and supply for the year, will be released at 15:00 GMT+4 (Dubai Time). For the third consecutive session, WTI oil futures dropped towards $77 per barrel on Monday as investors remain cautious ahead of U.S. CPI data and reports from OPEC and the IEA. WTI fell last week due to weaker Chinese oil imports, which overshadowed the extended supply cuts from OPEC+.
U.S. CPI is set for release on Tuesday at 16:30 GMT+4 (Dubai Time). The inflation rate is expected to remain at 3.1% YoY during February, while Core CPI is expected to have decelerated from 3.9% to 3.7% YoY in Feb.
The Dollar Index remained around 102.7 on Monday, hovering near its lowest levels since mid-January before the release of the data, which could affect the outlook for the Fed's monetary policy. According to analysts, a higher-than-expected reading is usually positive for the Dollar, and vice versa. The USD has already lost more than 1% after Jerome Powell's testimony last week. The Dollar maintained its losses, though, against most other major currencies. Still, it kept losing ground against the JPY after Japan's Q4 GDP figures were revised higher.
Wednesday: 13/03/2024
UK GDP is due for release on Wednesday at 11:00 AM GMT+4 (Dubai Time). The British economy is forecasted to have expanded by 0.2% MoM in January compared to a previous slowdown of 0.1%. This stronger expectation for the UK economy has stimulated strength for the British pound.
Another news item for crude oil prices this week is the U.S. crude oil inventories, set for release at 18:30 GMT+4 (Dubai Time). Analysts expect lower-than-expected crude inventories to be a positive driver for oil prices, and vice versa.
Thursday: 14/03/2024
Retail Sales, which measures the change in the total value of sales at the retail level in the U.S., is due to be released at 16:30. As a leading indicator of consumer spending that accounts for the majority of overall economic activity, the figure is expected to have increased by 0.8% MoM in February compared to a previous decline of 0.8%. According to analysts, a higher-than-expected reading is usually positive for the U.S. Dollar, while a lower-than-expected reading may be more harmful for the greenback.
Finally, PPI is on Thursday at 16:30 GMT+4 (Dubai Time). It is expected to have increased by 0.8% MoM in February compared to a previous decline of 0.8%. As analysts suggest, a higher-than-expected reading may be considered positive for the USD, and vice versa.
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