Major Events of Last Week
Global equities registered another quiet period by trading within a well-restricted horizontal range last week. Both trading volumes and volatile were subdued after Janet Yellen, the Fed Chairperson, offered no surprises at her testimonial before the US Senate. Although Greece successfully secured a debt deal with the Eurozone, its government subsequently expressed fresh concerns about major repayments, scheduled for settlement in the next few months. The USA posted data last Friday disclosing that its economic growth had slowed during the last quarter of 2014. The primary US indices responded to these events by retracting last Friday typified by the Dow Jones Industrial Average plunging by 80 points; the S&P500 slipping by 6 points and the NASDAQ dropping by 24 points.
Some prominent analysts are currently expressing concerns by the recent quietness of the financial markets. They are specifically worried that global equities are now overbought after achieving record highs in the last few weeks. Consequently, they fear that the stock markets are presently vulnerable to a significant correction if number key economic indicators, due to be release this week, miss their mark. This is because such outcomes could initiate a major bearish reaction generating a rectification as large as 20%. They are particularly anxious about the pending release of the US labor report next Friday in case it posts a figure that fails to meet economists’ expectations.
The Greek debt crisis continues to grab the world’s attention. Investor confidence received a boost last week when a last minute deal was struck extending Greek’s bailout program for an additional four months. Despite this positive development, the Greek government is now advising that it cannot honor major debt repayments scheduled for collection over the coming months. Key officials are already stating that the country simply does not possess the financial resources to service these liabilities. Forthcoming obligations include 1.6 billion euros in March; 800 million euros in July and 7.5 billion euros in July/August.
The USA Commence Department posted a worrisome indicator last Friday revealing that its Growth Domestic Product had been revised downwards for the last quarter of 2014 from 2.6% to 2.2%. This result compares to a 5% GDP produced in the third quarter. The decline was primarily generated from a jump in business inventories and an expanding trade deficit. However, economists dismissed the negativity of this figure by insisting that growth is expected to improve during the first quarter of 2015 although difficult wintry conditions could cap the upside. Their viewpoint centers on improving consumer spending resulting from a strengthening US labor market and declining oil prices.
Take advantage of this week’s market preview with one of the best brokers that we’ve reviewed like Finpari. See our complete list of binary options trading brokers that passed our approval checks.
What to Expect This Week
The subsequent key economic data will be posted globally during the coming week.
On Monday, China will present the final reading of its Manufacturing PMI for February. If this revision can produce another reading above 50, then it will suppress the persistent concerns about the true health of the Chinese economic recovery. The Eurozone will then print its Consumer Price Index for last month, which is expected to extend the recent trend of improving inflationary figures.
Japan will launch Tuesday by disclosing its Labor Cash Earnings for January and pundits are presently favoring an increase of 0.6%. The Reserve Bank of Australia will next announce its Interest Rate Decision and latest monetary easing statement. An anticipated interest rate cut of 25 basis points could exert significant pressure on the Australian Dollar, if verified.
Great Britain will reveal its Services PMI for February on Wednesday, which should post another reading above 50 as it has constantly done since the start of 2013. The USA will then publish its ADP Employment Report for February. If US private employers fail to create the expected 200K+ jobs, then the US Dollar could tumble. Later in the session, the Bank of Canada (BoC) will issue its Interest Rate Decision. No change is expected as the BoC still needs time to assess the full impacts of the surprise cut it instigated last month. The USA will complete the session by releasing its non-manufacturing PMI for February. This report will be closely monitored as it could provide vital clues about the all-prevailing Non-Farm Payroll figure scheduled for release on Friday.
The Bank of England will proclaim its Interest Rate verdict on Thursday. Although no change is expected, investors will still pay close attention to this announcement as it could provide insights into the possibilities of a rate hike in coming months.
The blue ribbon event of this week will occur on Friday when the USA declares its eagerly awaited labor report for February. Employers are predicted to have created over 200 new jobs during February to register the twelfth consecutive month of such gains. This release is extremely important as it could have a major impact on the exact timing of an interest rate hike by the US Federal Reserve.
