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Economic Week: Coronavirus developments, PMIs

Economic Week: Coronavirus developments, PMIs

Financial markets' participants will continue to monitor the latest developments of the spread of the deadly Coronavirus and its impact on global markets.

As for the most important economic reports, the most notably will be the Service and Manufacturing Purchasing Managers Index released from a number of major economies, which may indicate the negative impact of the spread of the Coronavirus on key sectors.

U.S. dollar

The US dollar will remain under scrutiny, as investors will follow some important economic data from the United States, with a reminder that the dollar has benefited greatly in the recent period from concerns related to the spread of the Coronavirus.

The most important report is the preliminary composite purchasing managers for the services and manufacturing sectors for March, which may indicate a widening contraction to 40.8, compared to February's reading of 49.6.

Among the most important reports issued this week will be the final fourth-quarter GDP reading, which may confirm the steady pace of growth at 2.1 per cent annually, which is the same as the final reading for the third quarter.

Another very important report is the Durable Goods Orders, which may show a 0.7 percent decrease in February after it recorded a 0.2 percent drop in January.

Data on the housing sector, as well as personal spending and consumer confidence, may receive some attention from investors.

Euro

The euro is likely to be affected by some important economic data released from the euro zone this week, which may give features about growth in the first quarter.

Investors will focus on the preliminary composite manufacturing and services PMI in the euro area, which could show a significant contraction to 39.2 in March from a reading of 51.6 recorded in February.

In the event of a significant deterioration in the PMI, this will increase concern about the impact of the spread of the Corona virus on the Eurozone economy. Accordingly, the single currency may come under more selling pressure.

Pound Sterling

This week, the UK will publish important reports related to Britain's major sectors and inflation, which are expected to have a significant impact on the pound's movements.

The preliminary PMI for the services and manufacturing sectors for March may indicate a contraction of 44.4 in March, compared to the previous reading of 53.0 recorded in February, according to analysts' expectations for the preliminary composite PMI that includes the three major sectors.

Analysts expect the consumer price index, the measure of inflation preferred by the Bank of England, to decelerate to 1.5% in February on an annualized basis from a 1.8% recorded in January.

The monetary policy meeting of the BOE may also be of great importance, as it may give updates on the economic situation in Britain after the surprise monetary actions announced by the bank last week to help the British economy face the negative effects resulting from the spread of the Coronavirus.

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