Economic calendar: Manufacturing sector surveys and European inflation

Summary:
- Canadian economy seen slowing to 1.2% in 2018
- ISM manufacturing expect to decline after January’s bounce
- European inflation may benefit from favourable base effect

Survey data is dominating the economic calendar on the final trading day of the week. Revised manufacturing PMI indices from the eurozone member countries will be released throughout the morning but second readings seldom tend to move the market. Manufacturing gauges will be also released in the UK and US. EUR and CAD may enjoyed elevated volatility as well thanks to, respectively, inflation and GDP data.

9:30 am GMT - United Kingdom, Manufacturing PMI for February. GBP enjoyed some relief as of late as everything began to suggest that Brexit will be delayed. It comes without saying why more time to work out an agreement with the EU is desired. However, as the Brexit debate can be seen as somewhat easing, the UK assets may become more sensible to domestic data. The manufacturing PMI from the UK moved slightly lower throughout the past year but still remains in the reasonable distance from the “contraction area”. Market consensus expects index to drop from 52.8 pts to 52 pts but there is a scope for improvement in the months to come in case chances of no-deal Brexit keep shrinking.

10:00 am GMT - Euro area, CPI inflation for February. European price growth was slowing down significantly in the final months of 2018. Continuing sluggishness may effectively distance ECB further away from long-awaited rate hike. However, there is a scope for a pick-up today as the reading for February 2018 was just 1.1% providing a favourable base effect. Nevertheless, market consensus suggest that price growth will accelerate just slightly, from 1.4% YoY to 1.5% YoY. Core gauge should stay unchanged at 1.1% YoY.

1:30 pm GMT - Canada, GDP report for Q4 2018. Investors will be offered a complex reading of the Canadian GDP today as apart from the regular monthly print the Canadian authorities will also release quarterly data for the final three months of 2018. Monthly readings gave us some hints on how the quarterly print may look like and it did not bode well. GDP growth in Canada was at 2% YoY at the end of September (Q3) and decelerated to just 1.7% YoY in November. Economists expect a slowdown to 1.2% YoY at the end of Q4.

3:00 pm GMT - United States, UoM data and ISM manufacturing for February. A pack of the survey data from the US will conclude the week. As University of Michigan print will be a revision, attention will be drawn to ISM gauge. After a steep drop in December the ISM manufacturing index managed to rebound in January. However, preliminary manufacturing PMI for February hinted at major deterioration and one cannot rule out that ISM will follow. Meanwhile, market consensus sees a drop from 56.6 pts to 55.5 pts.

Central bank speakers scheduled for today:
- 5:50 pm GMT - Fed’s Bostic
- 6:15 pm GMT - Fed’s Bostic

EURUSD enjoyed a strong upward move in the second part of February. However, the main currency pair recently began to struggle in the vicinity of 50-session moving average (green line on the chart above) and 1.14 handle. The pair erased yesterday’s gains after solid US data print and today’s EU inflation reading may help euro recoup some of the recent losses. Source: xStation5

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