- Another Brexit vote and summit of EU leaders
- First “dot-plot” of 2019 to be released on Wednesday
- PMIs to update view on the US and EU economies on Friday
Following last week’s Brexit votes extension of the Article 50 looks like a done deal. However, scale of progress in negotiations during the week ahead will be crucial for whether we will see just a short 3-month delay or a longer one. Apart from that, USD will get a chance to regain ground as FOMC is set to hold quarterly meeting. Last but not least, preliminary PMI indices for March will provide an update on moods within the EU and US economies.
Readings scheduled for Monday:
- 10:00 am GMT - Euro area, Trade balance for January. Expected: €15 billion, previous: €15.6 billion
- 10:30 am GMT - Chile, GDP report for Q4 2018. Expected: 2.9% YoY, previous: 2.8% YoY
What to watch for the remainder of the week?
Brexit vote and EU leaders summit (vote - Tuesday, summit - Thursday-Friday)
Votes in the UK parliament scheduled for the previous week went exactly as expected - parliament once again rejected May’s deal and ruled out no-deal exit while opting for deadline postponement. Now the question remains on the length of delay. In case the UK lawmakers fail to back deal by 20 March, Theresa May will try to negotiate longer extension with the EU leaders during summit in Brussels. However, in case she somehow manages to convince parliament to back her, extension until June is the most likely option. Affected markets: UK100, GBPUSD.
FOMC meeting (Wednesday, decision - 6:00 pm GMT; conference - 6:30 pm GMT)
Outlook for the US monetary policy is a bit mixed. On one hand, wage growth accelerated significantly raising scope for inflationary pressures to surface. On the other, the latest comments from Fed members were quite dovish. Attention will be paid to dot plot as investors wonder whether the US central bankers will uphold their guidance of one rate hike in each of the next two years and a pause in 2021. Moreover, any remarks on termination of trimming balance sheet are also likely to move markets. Affected market: US500, TNOTE.
PMI indices from the US and euro area (Friday)
Spectre of the economic slowdown is still lingering on the global economy as no developments in the US-China trade war were offered lately apart from news saying that Trump and Xi are likely to meet at later date than previously expected. Such announcement was seen as a warning that negotiations aren’t going as planned. Having said that, we may have to wait for a rebound in manufacturing PMI indices a bit longer. Affected markets: EURUSD, USDJPY.
GBPUSD climbed back to the resistance zone ranging 1.3250-1.3320 during the previous week. Decision on the length of Brexit deadline extension and FOMC meeting are likely to move this currency pair this week. In case a break above the aforementioned zone occurs bulls should watch 1.3520 area (50% Fibo level). Source: xStation5