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The most important economic events expected this week 8 to 12 March 2021
The US economy continues on its way to recovery, with strong indications for Purchasing Managers and Non-Farm Payroll reports. The US dollar also showed strength, supported by higher US Treasury yields. This week's spotlight is on interest rate decisions released by the European Central Bank and Bank of Canada, and GDP reports in the Eurozone and the UK.
Inflation was strong in the Eurozone in February, with Germany recording 0.7% and the Eurozone 0.9%. Final PMI reports for Germany and the Eurozone indicated strong growth in manufacturing but indicated contraction in the services sector. The German Manufacturing PMI was particularly strong, at 60.7.
UK manufacturing remains a bright spot in the economy, with the Manufacturing PMI rising to 55.1, up from 54.1. Construction PMI showed growth, with a reading of 53.3, up from 49.2. The services sector showed improvement but remained in contraction, with a reading of 49.5. Level 50 separates contraction from expansion.
In the US, the ISM PMIs remained in expansion territory in February. Manufacturing PMI rose to 60.8, up from 58.7 previously. This was the highest level since August 2018. Services PMI slowed to 55.3, down from 58.7. The week ended with a reading of the non-agricultural employment report, which starred with a reading of 397,000, surpassing estimates of 197,000. The unemployment rate fell to 6.2%, down from 6.3%.
The most important data awaited this week:
Adjusted GDP for the Eurozone: Tuesday. The second estimate of growth in the fourth quarter of 2020 stands at -0.6%, which will confirm the initial estimate. The lack of economic growth can be attributed to the stringent health restrictions caused by Covid-19.
US Inflation Report: Wednesday. Inflation in the US is expected to pick up in the coming months, as there is significant pent-up demand due to COVID-19 health restrictions. The core CPI is expected to increase from 0.3% to 0.4%, while the core CPI is expected to increase from 0.0% to 0.2%.
Bank of Canada interest rate decision: Wednesday. The Bank of Canada is expected to maintain its overnight interest rate at 0.25%, as it has been anchored since March. The hawkish interest rate statement will be bullish for the Canadian dollar.
European Central Bank interest rate decision: Thursday. The European Central Bank holds its monthly annual policy meeting on the back of soaring global bond yields. Investors will closely monitor the price statement, looking for clues regarding future monetary policy.
German Consumer Price Index: Friday. Inflation showed a respectable 0.8% gain in February and a second estimate is expected to come in at 0.7%.
British GDP: Friday. The monthly GDP report showed a rise of 1.2% in December, bouncing from -2.6% previously. Will we see further gains in January?
Canadian Employment Report: Friday. The Canadian job market has tumbled recently, and the January release - 212.8k was disastrous. Unemployment increased to 9.4%, up sharply from 8.6%. We are now waiting for the February data.
