As if Janet Yellen didn’t create enough volatility for the trading crowd last week, we have more coming up this week so we gotta watch out!
First, let’s review what happened over the weekend and then prep up for the coming days.
Friday’s trading was pretty much consolidating, because investors and traders chose not to make any big decisions ahead of the weekend – where markets close, but politicians’ mouths stay open. Europe had enough domestic situations to deal with this weekend, without thinking about Russia.
In Spain we saw tens of thousands of demonstrators protesting against further austerity and EU imposed limits on debt to GDP ratios. The protests turned violent in Madrid and ended with police firing rubber bullets – scenes reminiscent of 2012, where that was a fairly standard weekend. In Italy, Venice has voted to become its own sovereign state. The unofficial poll last week concluded with a whopping 89% of Venetians wanting to return the City and some surrounding areas to the ‘Repubblica Veneta’, as it was 150 years ago. The poll has been dismissed as unofficial by authorities, but given that this is Italian politics, there will probably be a charismatic individual willing to now take the fight to Rome and see where this goes.
The sanctions imposed on Russia by the west were shaken a bit over the weekend, as Visa and Mastercard reversed their decision to halt transaction with three Russian banks. Russia continue to make advances into Crimea, with reports this morning that another Ukrainian base in the region has been taken by Russian forces. We’re yet to see a significant increase in rhetoric or action from Europe or the US, while a NATO top general has said that Russian troops on Ukraine’s eastern border are “very sizeable and ready.”
In Asia, weaker than expected Chinese manufacturing numbers threw Asian equities in the air before catching them. The HSBC PMI numbers showed a fifth consecutive month of declines for the country and actually posted the lowest reading in eight months.
Coming Up This Week…
1- PMI Numbers from Europe and U.S.
As we speak, Flash manufacturing and services PMIs from France, Germany, and the euro zone will are being released. French numbers came in better than expected while Germany disappointed the EUR. Coming up next is the US data scheduled for 9:45 am EST.
2- G7 Meetings
Some currencies might change the rhythm of their dance moves on the forex dance floor (chart) as the Group of 7 countries consisting of Canada, France, Germany, Italy, Japan, the U.K. and the U.S. meet up.
Although the meetings are closed to the public, some officials give statements to reporters and an official statement is released at the end of the meeting.
One reason why the meeting will be closely watched is the possibility that some of the Finance Ministers will attempt to put more pressure on the currency of their zone. Another more important reason is that the G7 leaders are making it their business to discuss Russia’s latest moves on Ukraine.
If the leaders decide on heavier sanctions against Russia for its moves this week, then we might see another leg of risk aversion across the board. On the other hand, softer-than-expected sanctions could inspire a mild profit-taking if not an outright risk rally in the markets.
3- UK and US Hot Market Moving Figures
The UK will bombard us with data this week, with the inflation data on Tuesday, the final reading of Q4 GDP on Wednesday and retail sales on Thursday.
The latest MPC meeting minutes reflected that the members aren’t expecting consumer prices to rise by more than 2.5% for the next 18 to 24 months.
The consumer spending theme will continue on Thursday with the retail sales data scheduled at 9:30 am GMT. Last month’s data showed a surprising 1.5% drop for January and a downward revision for December’s figures. Fortunately, it had minimal impact on the pound. But will the weakness continue on through March?
The US sees its final reading of Q4 GDP on Thursday and the big question will be if the Dollar can continue its run of strength following Janet Yellen’s FOMC curve ball last week.
Stay tuned for more updates, and catch me live today for an hour on Wealth DNA Radio Show with Ron Nawrocki starting at 9:00 AM Arizona time (12:00 pm EST.) We will be discussing:
– Where do we trade currencies
– How do we get started
– What do we have to research
– Can individuals really compete
And much more! Tune in or call at 917-388-4162 to speak with the host.
Invest responsibly
xoxo
Kiana
