Major events of the upcoming week
The past week has shown that news from the US continues to act as the main driver of the financial market movement. Any deviations of the actual values of macroeconomic indicators from forecasts lead to fairly strong market fluctuations. Last week, unexpectedly very strong data on retail sales sharply increased investor risk appetite, but a day later, disappointing labor market data nullified all market optimism and triggered long positions in risky assets. It is obvious that with the current problems in the labor market, it will be extremely difficult for the United States to achieve high rates of economic recovery after the crisis.
The situation will not change dramatically in the coming week. The market will continue to focus on news from the US. Investors will follow not only the discussion of the new draft law on aid to the economy, but also the publication of fresh macroeconomic statistics that will assess the state of the world's largest economy.
On Tuesday, The Conference Board's Consumer Confidence Index is expected to be published, while on Thursday all attention will be focused on the final estimate of the US GDP growth rate for the 4th quarter and the report on durable goods orders.
US – Consumer Confidence Index from The Conference Board
In the fourth quarter of 2020, the consumer confidence index from the CB showed a downward movement vector, putting pressure on the US currency. From October to December, the indicator decreased from 101.4 points to 87.1 points. In January, the first signs of a recovery appeared. The index rose to 89.3 points. In February, experts predict further growth of the indicator to 89.6 points. With a fairly high probability, we can expect the publication of data above the forecast values, which may provide strong local support for the dollar and stock indices.
US – data from the final estimate of US GDP for the 4th quarter.
Due to the peculiarities of the calculation, very often the final data on US GDP turn out to be higher than the preliminary values. Therefore, on Thursday, we can most likely expect the publication of stronger data than in the preliminary reports. According to experts, the quarterly growth of US GDP may increase from 4.0% to 4.3%, which is likely to cause a positive reaction from the stock market. The impact of this indicator on the foreign exchange market is likely to be very restrained.
US – report on basic orders for durable goods.
Over the past three months, the growth rate of orders for durable goods has been steadily declining. From + 2.1% in October, the indicator decreased to + 0.5% in January. In February, experts expect to see an increase in the indicator by 1.4%, which may well correspond to the actual values. Stronger data will boost investor risk appetite as it points to increased activity among US manufacturing companies.