Major events of the upcoming week
Last week, investor sentiment on financial markets improved. With the increasingly active introduction of the COVID-19 vaccine, many expect an improvement in the epidemiological situation, a relaxation of quarantine restrictions and a gradual recovery of the global economy. But weak macroeconomic data from the US is currently significantly limiting investor risk appetite. It is clear that the US economy is still in serious trouble due to the pandemic. The number of initial applications for unemployment benefits remains abnormally high, and the rate of inflation does not match the general market expectations.
The main focus of the market is still on economic indicators, as the policies of most of the leading central banks remain unchanged. In the coming week, the market will focus on the interim data on the manufacturing and service sector PMI for February. This data helps the market to quickly assess the state of key sectors of the economy and track changes. Investors will also be watching new statistics from the United States.
Traditionally, traders will closely follow the statements of the ECB and FRS, but, most likely, the rhetoric remains unchanged, and the market reaction to these events will be restrained.
USA - Retail Sales Report
The economic situation in the United States remains difficult. Companies have been slow to recruit new workers amid continuing uncertainty. This is exerting strong downward pressure on the dynamics of the labor market development. Considering the above, consumer activity remains low. Nevertheless, experts predict a moderate growth in retail sales after an unexpected decline in February. In January, sales are expected to rise by 0.7% after declining by the same 0.7% in December. The benchmark retail sales index is expected to rise 0.8% after falling 1.4% in December.
USA - FOMC Protocols
In recent weeks, Fed officials, including Jerome Powell, have repeatedly commented on the bank's monetary policy. The position of almost all the participants in the FOMC meeting is identical, they advocate the preservation of the stimulating policy for a long period of time. Last week, Fed Chairman Jerome Powell repeated these statements once again, so the market does not expect big surprises from the FOMC protocols. Obviously, the participants in the meeting do not see any reasons for changes in the main parameters of monetary policy. Therefore, the impact of this event on the market is likely to be very restrained.
US & EU - Manufacturing and Services PMI
In recent weeks, the market reacted more restrained to the publication of PMI data, but the influence of these indicators on investor sentiment remains quite high.
Despite tight quarantine restrictions, manufacturing PMIs in the EU remain above 50, indicating an increase in economic activity in this sector of the economy. The service situation is more difficult, as this sector of the economy suffers most from the imposition of travel restrictions. Nevertheless, experts predict a slight increase in the indicator from 47.8 to 48.1 points.
If the experts' forecasts are justified, the EUR / USD pair may receive another impetus for the development of an upward movement.
In the US, PMIs are well above the 50 mark, signaling increased activity in key sectors of the economy. But in February, experts predict a slight decline in indicators against the background of the continuing uncertainty of the prospects for the development of the US economy. The PMI of the manufacturing sector is expected to decline from 59.2 to 56.3 points, while the PMI of the services sector will fall from 58.3 to 53.6 points.