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The most important economic events expected this week 15 to 19 March 2021
The US Treasury yields had a strong impact on the currency markets and are still in focus. The Fed and Bank of England are holding policy meetings this week, and the euro zone and Canada are publishing inflation reports.
The European Central Bank announced an acceleration of its purchase of Eurobonds under the emergency PEPP program, in response to higher yields. The European Central Bank has not specified the amount or timeframe for the new purchases. The Euro's reaction to this move was muted. Eurozone GDP for the fourth quarter was revised down to -0.7%, down from -0.6%.
In the UK, the monthly GDP report showed that the economy contracted by 2.9% in January. This was much better than the street consensus of -4.9%, but indicated a slowdown in growth after a 1.2% rise in December. The economy posts negative growth for the second time in three months, raising concerns about the health of the economy.
The Bank of Canada raised its positive forecasts for first quarter GDP growth, indicating that the economy was recovering more quickly than expected. The bank kept interest rates at 0.25% and said it had no plans to raise rates until 2023.
Canada recorded pending employment numbers on Friday, driving the Canadian dollar higher. The economy created 259,000 jobs in February, after two consecutive declines. The unemployment rate decreased to 8.2% from 9.4%.
In the US, inflation picked up in February, comforting the market, which was concerned that pent-up demand would lead to runaway inflation. Core CPI rose to 0.1%, up from 0.0%. Core CPI rose to 0.4%, up from 0.3%. The week ended on a positive note, as UoM consumer confidence for the month of March rose from 76.2 to 83.0. Consumer confidence rose to its highest level in 12 months.
French Final Consumer Price Index: Tuesday, 7:45. Inflation in the second largest economy in the Eurozone confirms the initial estimate of -0.1%. Inflation in the second largest economy in the Eurozone is expected to confirm the initial estimate of -0.1%. The decline comes after three straight gains of 0.2%.
US Retail Sales: Tuesday, 12:30. Retail sales were fueled in January, as the major and primary issuance posted gains of more than 5 percent. The month of February is expected to be muted, with the headline reading at -0.5% and the core release at 0.2%.
Eurozone Inflation Report: Wednesday, 10:00. There are growing concerns about rising inflation in the Eurozone, as ECB President Lagarde alluded to in her decision to buy more Eurobonds. Final figures for February are expected to confirm the preliminary estimates of 0.9% for the core CPI and 1.1% for the core CPI.
Canadian Inflation Report: Wednesday, 12:30. The core CPI rose 0.6% in January, the highest level in seven months. Another strong gain for February is expected, with a 0.7% estimate.
Federal Reserve Rate Decision: Wednesday, 18:00. The Fed is expected to send a dovish message to the market. As the US recovery gains momentum, investors will be interested in the Fed's economic outlook and Score Chart, which indicates the Fed's expectations about future interest rate changes.
Bank of England rate decision: Thursday, 12:00. The Bank of England is widely expected to keep the official cash rate at 0.10% and asset purchases at £ 895 billion. As the UK goes through its worst economic crisis in three centuries, investors will be looking for clues from the bank about whether it plans to add stimulus in order to boost the economy.
Canadian ADP Nonfarm Employment Report: Thursday, 12:30. The ADP report painted a bleak picture for the job market in January, with a reading of 231.2k. We are now waiting for the February data.
