Weekly Outlook of Financial Markets for March 18-22

Major commodities including crude oil gold and silver didn’t do much during last week. Moreover, major currencies pairs such as the Euro/USD also were little changed during the previous week. The upcoming week might bring along with it a rise in the prices volatility of commodities and currencies as the FOMC meeting will be held Tuesday and Wednesday. The recent developments in Cyprus, in which Cypriot President Nicos Anastasiades eventually accepted the EU ministers’ demand and will raise 5.8 billion euros by posing a levy on every Cyprus bank deposits, resulted in pulling down the Euro on the first day of the week. Will commodities resume their rally fall in the upcoming week? Next week several reports, events and publications may affect the financial markets. These include: FOMC meeting, Philly fed survey, China’s manufacturing PMI, U.S existing home sales, EU manufacturing PMI, German ZEW economic sentiment, Japan’s trade balance, Canada’s retail sales, GB annual budget,  minutes of MPC monetary policy, minutes of RBA meeting, U.S housing starts, Great Britain PPI input, and U.S. jobless claims.  Here is an economic forecast for the week of March 18th to March 22nd regarding the U.S, Euro Area, China, Japan, Canada, Australia, and Great Britain.   

(All times GMT):

Monday, March 18th

00:30 – Minutes of Australia’s Bank Monetary Policy Meeting: The minutes of the recent monetary policy meeting of the Reserve Bank of Australia may provide some insight the main reasons behind the board’s latest decision to leave the basic interest rate at 3%; the minutes of this meeting may affect the Australian dollar and consequently commodities prices including oil and gold;

Tuesday, March 19th

10:30 – Great Britain PPI Input: this report will refer to the GB’s PPI input for February 2013; as of the latest monthly update, the PPI input rose by 1.3%;

11:00 – German ZEW economic sentiment: The upcoming update will refer to the ZEW indicator of economic sentiment for Germany for March. In February the ZEW indicator for Germany increased again to 48.2 points; if Germany’s economic sentiment will rise further, the Euro will plausibly strengthened against other currencies such as the USD;

Tentative – Bank of England Inflation letter: this report will show the yearly rate of GB’s inflation based on the estimate of Bank of England; the bank will publish the letter only if the inflation is exceed 3% or will be below 1%;

Wednesday, March 20th

10:30 – Great Britain Claimant Count Change: This report will show the changes in the number of unemployed in GB; as of the previous month’s report this figure had declined by 12.5k; the rate of unemployment edged up to 7.8% in the recent report;

10:30 – Minutes of MPC Meeting: in the recent MPC meeting, the Bank left the rate flat at 0.5% and the asset purchase program at £375 billion; the MPC still has concerns regarding GB’s inflation. The minutes of last week’s meeting might offer some insight behind this decision;

13:30 – U.S. Housing Starts: the U.S Census Bureau will publish its U.S housing starts monthly report for February 2013; this report was historically linked with gold price – as housing starts fall, gold prices tended to rise the next day (even when controlling to the U.S dollar effect); in the recent monthly report, the adjusted annual rate reached 890,000 in January 2013, which was 8.5% drop December’s rate;

13:30 – U.S. Building Permits: in the latest update, building permits increased during January by 1.8% (M-o-M) in the adjusted annual rate of building permits was 925,000. If building permits will continue to rise, it may indicate that the U.S housing market (from this aspect) is recovering (the recent U.S building permits update);

Tentative – German 10 Year Bond Auction: the German government will issue its monthly with bond auction; in the recent bond auction, which was held at the last week of February, the average rate reached 1.66% – the highest rate in recent months;

13:30 – GB Annual Budget: This will outline the annual budget of GB’s government for 2013;

15:30 – U.S Crude Oil Stockpiles Weekly Update: the EIA (Energy Information Administration) will come out with its weekly report on the U.S oil and petroleum stockpiles for the week ending on March 15th; in the latest update for March 8th, stockpiles fell again by 5.6 ml bl to reach 1,776.7 ml bl.

19:15 – FOMC Meeting: The FOMC will convene for the second time this year and announce at the end of two day of session of any updates to its monetary policy and interest rate. In the last FOMC meeting, which was held back at the end of January, the Fed didn’t announce of any changes. Bernanke remains dovish and has the majority in the board. Several members, who represent a minority in the board, remain hawkish and want to put a time frame on the current asset purchase program. If in the upcoming meeting, the balance of power will shift towards the  hawkish standpoint, then this could pull down gold and silver prices. This scenario, however, is less likely. The Fed will also update its economic outlook. Considering the progress in the housing and jobs markets, it might be more positive on the future of the U.S economy. The likely scenario is that the Fed will keep its policy unchanged. In such a case, the market might react as it did back in January – a sharp rise in bullion rates followed by a sharp decline the next day;

23:50 – Japanese Trade balance: The Japanese trade balance deficit for January 2013 declined by 13.4% compared to December, and reach 678 billion YEN (roughly $7.1 billion) deficit (seasonally adjusted figures). This decline is due to the higher growth in exports (by 3.6%) than in imports (by 1.4%). Japan is among the leading importers countries of commodities, including crude oil and gold; its trade balance could offer some perspective regarding Japan’s changes in demand goods and services;

02:45 – China flash Manufacturing PMI: this index will be based on a survey of 800 companies in 20 industries in China; as of the latest the HSBC Manufacturing PMI survey regarding February 2013 the Manufacturing PMI declined to 50.4; this index indicates the developments in China’s manufacturing sectors growth rate; if the index will continue to fall, this may adversely affect commodities rates;

Thursday, March 21st

09:00 – Flash German, French and Euro Zone Manufacturing PMI: In the recent update regarding February 2013, the German PMI increased to 50.1 i.e. the manufacturing conditions are still expanding at a slower rate. This report serves as an indicator to the economic changes of the Euro Area’s leading economies’ manufacturing conditions; this news, in turn, may affect the Euro/USD currency pair and consequently commodities prices;

10:30 – GB Retails Sales (February 2013): This report will present the developments in the retails sales in Great Britain for February 2013. It may affect the direction of the British Pound currency. In the latest report regarding January 2013, retails sales fell again by 0.6% – second month in a row;

13:30 – U.S. Jobless Claims Weekly Report:  this weekly update will refer to the shifts in the initial jobless claims for the week ending on March 15th; in the recent report the jobless claims declined again by 10k to reach 332k; this upcoming weekly update may affect the path of U.S dollar and consequently commodities and stocks markets;

13:30 – Canada Retails Sales (January 2013): This report will refer to the retails sales in Canada as of January. It may affect the USD/CAD currencies pair, which is strongly correlated with commodities rates. In the recent report regarding December 2012, retails sales fell again by 0.9%.

15:00 – U.S. Existing Home Sales: This report will pertain to the changes in U.S. existing home sales for February 2013; in the latest report regarding January 2013 the number of homes sold edged down to a seasonally adjusted annual rate of 4.92 million houses; if this trend will continue, it might pressure down the U.S dollar;

15:00 – Philly Fed Manufacturing Index: This monthly survey shows an estimate for the growth of the US manufacturing sectors. In the latest February survey, the growth rate declined again from -5.8 in January to -12.5 in February. If the index will continue to decline it may adversely affect not only U.S Dollar but also American stocks and commodities markets (the previous Philly Fed review);

15:30 – EIA U.S. Natural Gas Storage Update: the EIA weekly update of the U.S. natural gas market will pertain to the latest changes in natural gas production, storage, consumption and prices as of March 15th; in latest weekly report, natural gas storage fell again by 145 Bcf to 1,938 Bcf;

Friday, March 22nd

09:00 – German Business Climate Survey: This survey estimates the shifts (on a monthly basis) of the business climate of Germany as of March. In the recent report for February 2013, the business climate index rose from 104.2 in January to 107.4 in February; if this trend will continue, it might pressure up the Euro.


For further reading: