Market Technical Analysis

The Week Ahead – ECB Meeting and Non-Farm Payrolls in Focus

The latest developments in financial markets have brought the Fed Funds Rate to rise to 79.7% rate hike probability at the central bank next meeting on March 15. Janet Yellen’s comment on Friday confirmed that the US central bank adapted the recent economic data and is ready for the next rate hike.

“We currently judge that it will be appropriate to gradually increase the federal funds if the economic data continue to come in about as we expect,”

The US jobs report on Friday will be the last confirmation before another rate hike. Good reading – and the Federal Reserve can no longer dodge to increase its interest rate this month. The next non-farm payrolls will be an important event for the US and global economy.

Apart from that, the ECB meeting on Thursday will be particularly vital as questions about the European quantitative easing program will be asked, with Eurozone Inflation numbers are close to ECB target.

Here are the main economic events of the upcoming week:

Monday

  • Australian MoM Retail Sales will be released at 00:30 GMT and expected to rise to 0.4% from -0.1% a month earlier. The data can add to the previous week better than expected Australian GDP data as the Australian economy starts float above negative growth.

Tuesday

  • RBA Interest Rate Decision will be announced at 3:30 GMT and rates are expected to remain unchanged. However, any comments from policy makers can help the Aussie next direction.
  • Eurozone Q4 GDP (3rd Estimation) will  be released at 10:00 GMT. QoQ is expected to rise to 0.4% from previous estimation of 0.3% while YoY is expected to remain unchanged at 1.7%.
  • US January Trade Balance will be published at 13:30 GMT, US deficit is expected to rise to $-47.3B from $-44.3B.
  • Canada Ivey PMI will be released at 15:00 GMT and expected to fall to 55.5 from 57.2.
  • Japan Q4 GDP will be published at 23:50 GMT. Japan annual growth is forecasts to rise to 1.6% from 1.3%.

Wednesday

  • China Trade Balance will be released at 2:00 GMT. The Chinese deficit is expected to shrink to $25B from $51.35B. YoY exports are expected to rise to 10% compare to 7.9% while YoY imports are expected to rise to 20.3% from 16.7%.
  • ADP Employment Report will be published at 13:15 GMT and expected to drop to 190K new jobs compare to previous month increase of 246K. The data can imply the US jobs report result on Friday that will be significant to economy after rate hike probability increased in the past two weeks.

Thursday

  • China Inflation Rate will be published at 1:30 GMT and expected to fall to 1.6% from 2.5%. MoM inflation rate is expected to also fall to 0.6% from 1.0%.
  • ECB Interest Rate Decision will be published at 12:45 GMT. Economists do not expect any rate change in the European central bank meeting, however with Eurozone inflation on the rise, questions will be asked regarding an update of the central bank QE program. ECB president, Mario Draghi will hold a 45 minutes press conference post the rate decision to speak about the ECB asset purchasing program.

Friday

  • Germany Trade Balance will be released at 07:00 GMT and surplus is expected to fall to €14.1B from €18.7B.
  • UK Trade Balance will be released at 9:30 GMT and trade deficit is expected to grow to £3.8B from  £3.3B.
  • UK Manufacturing Production for January will be published at 9:30 GMT. Expectation are for a decrease of -0.5% compare to an increase of 2.1% a month earlier.
  • US Non-Farm payrolls Report will be released at 13:30 GMT. The consensus forecast is for an increase of 190K new jobs following an increase of 227K in January. The data will attract markets attention as recent developments concluded that the Federal Reserve will increase its rates in the next meeting on 14-15 March. In addition, US employment rate is expected to fall to 4.7% from 4.8%.

Check out our real-time Economic Calendar

Published by

Tom Chen

Tom Chen is a financial analyst as well as an active trader. Tom began trading currencies and commodities in 2005 which during this time developed and refined his approach. Tom Holds BA in Economics and a Journalism diploma from the 'London School of Journalism'.