Major Events of Last Week
A substantial recovery in oil prices late last week helped global equities pared a sizeable portion of the previous losses which they had registered during the earlier part of a very capricious trading week. Prominent economists summarized this development by advising that appreciating oil prices were, indeed, totally responsible for last Friday’s rebound. However, they then proceeded to warn that the ensuing rally was now extremely vulnerable to an instant and major reversal because of the sizeable downside risks of a serious slump in crude prices. They particularly stressed the danger of leading oil producers failing to reach a ‘production restrictions’ agreemnat when they convene at a vitally important meeting in Doha on 17th April. They also listed excessive crude stockpiles as another catalyst capable of sparking a new decline.
Traders were stunned last week by the rapid appreciation of the Yen causing it to rocket upwards across the board against other major currencies. Many revered experts quickly identified the hazards associated with such an event since it is usually fueled by a substantial increase in global risk aversion and deepening investor stress. They explained that such risks were definitely boosted last week by new warning signs that the US economic recovery was beginning to falter.
Analysts devise these nervous conclusions despite Janet Yellen, the Chairperson of the US Federal Reserve, specifically stating last Thursday that the US economic was still garnering traction warranting further interest rate hikes later in 2016. In contrast, they explained that their more pessimistic observations were based on the latest forecasts of a number of esteemed institutions which are presently predicting that the US Gross Domestic Gross (GDP) for the first quarter of this year will hover about an insipid 0.4%. If such a dismal figure is verified, then they cautioned that the probabilities of a rate hike in June will crash to below 20%.
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What to Expect This Week
No major global events or data releases are scheduled for Monday.
On Tuesday, Great Britain will present important inflationary data for March. Consumer Price Index (CPI) is forecasted to beat its previous print of 0.2% while Producer Price Index (PPI) should hover about 0.1%. However, if these vital parameters miss their respective targets, then Sterling could come under fresh pressure.
The Eurozone will commence Wednesday by disclosing its ‘Industrial Production’ for last month which is expected to extend its previous gain of +2.1%. Investors will study this result carefully in order to glean any insights into the effectiveness of the new stimulus measures recently instigated by the European Central Bank (ECB). Later, the USA will reveal its ‘Retail Sales’ for March. Although this indicator is notorious for its unpredictability, economists are hoping for a rebound from the previous dire reading of -2.1%.
The Bank of Canada (BoC) will then announce its latest interest rate decision and future guidance policies. Despite the expectation that the BoC will keep its benchmark rates unchanged, the new monetary policies may provide clues into whether it intends to introduce any fresh stimulus measures within the short-term. Australia will complete the session by publishing its labor report for last month. The unemployment rate should remain static about its 5.8% mark.
The Bank of England (BoE) will provide its own interest rate verdict on Thursday together with the minutes from its latest policy meeting. Although rates are anticipated to remain steady, analysts will scrutinize the accompanying minutes in order to specifically assess how the BoE intends to copy with a potential Brexit. The USA will then post its ‘Jobless Claims’ for the week ending 10th April. Again, this figure should confirm that the number of Americans filing for unemployment benefits during the specified period resided within the ‘250k to 290k’ range. At the same time, the USA will issue its CPI for March which is predicted to recover from its disappointing February outcome of -0.2%. If no improvement is confirmed, then the Fed may contemplate slowing its 2016 rate hike program even further.
The USA will terminate the week by releasing its ‘Industrial Production’ for March on Friday. If this parameter delivers another negative value, then such a result will add additional credence to the viewpoint that the nation’s important manufacturing sector is still under duress.
