Major Events of Last Week
The USA released key economic data towards the end of last week demonstrating that the rate of production of new jobs slumped severely during January. The primary catalysts for this deterioration were significant layoffs in Christmas festive hiring. Specifically, Nonfarm Payrolls disclosed that just over 150,000 posts were generated last month compared to the predicted 190,000.
Without doubt, this result was definitely disappointing at first sight. However, a more detailed study provided a substantial boost in confidence. For example, wages staged a recovery during January illustrated by Average Hourly Earnings growing by 0.5% producing an annual gain of 2.5%. In addition, the unemployment rate dropped by 5.0% to 4.9% recording its lowest level since 2008. After analyzing the labor report diligently, prominent economists advised that investors should now not so quickly dismiss a second rate hike by the Fed in March. They primarily based this advice on the premise that a number of key statistics presented within the document were in compliance with the targets set by the US central bank.
Prior to this event, many investors had markedly reduced their expectations of further Fed hikes within the short-term amid escalating geopolitical uncertainties and indications of a serious global economic slowdown. The US labor report certainly made them revise their forecasts late last week resulting in the financial markets plummeting and the US Dollar recovering its composure across the board.
To place the US labor results supplied last Friday into perspective, Janet Yellen, the Fed Chairperson, recently advised that the US economy needed to generate about 100,000 new posts monthly in order to sustain the current growth of the US workforce. Consequently, the resultant uplift acquired from the promising US labor report is now expected to counter the negativities created by a significant US economic slowdown registered in the last quarter of 2015.
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What to Expect This Week
Australia is scheduled to present a key Business Confidence Survey late Monday EST. Despite printing a continuous stream of positive figures since the middle of 2013; Chinese economic woes have increased the possibilities of a negative result this time around.
On Tuesday, Australia will disclose a major Consumer Sentiment Index for last month which is also predicted to register a slump following a sequence of positive monthly results.
The United Kingdom will launch Wednesday by revealing its Manufacturing Production for January. After the last two reports each recorded monthly declines of 0.4%, economists will be hoping for a rebound on the back of a recent release of promising British economic data. Later, one of the pivotal events of the week will occur when Janet Yellen, the Fed Chairperson, commences a two-day testimonial before the US Congress. She is expected to adopt a dovish stance when justifying the current viewpoints and monetary policies of the US Central Bank because of the persistent threat of a serious global economic slowdown.
On Thursday, Yellen will continue delivering her testimonial by expounding the themes introduced the day before. Governor Stevens of the Reserve Bank of Australia (RBA) will complete the day by presenting his own testimonial before lawmakers. Investors will be keen to learn if he will provide any new insights into when the RBA will most likely cut interest rates during 2016.
The Eurozone will launch Friday by posting the initial sighting of its Gross Domestic Product (GDP) for the fourth quarter of 2015. Analysts are forecasting that this indicator should remain steady by growing 0.3% for the second consecutive quarter. The USA will then post its Retail Sales for January. Investors are hoping for a rebound following December’s disappointing decline of -0.1%. The USA will complete the week by issuing a prominent Consumer Sentiment Index. Expect consensus is favoring a read within the lower 90s amid declining oil prices and slowing job creation.
