Fundamental Comment

Economic Week: Fed minutes, PMIs

Economic Week: Fed minutes, PMIs

Financial markets' participants will be carefully watching the Federal Reserve's minutes of the latest monetary policy meeting, while eyes will also follow the Service and Manufacturing Purchasing Managers Index published from a number of major economies.  

US Dollar

The most important this week in the US will be the Fed's monetary policy meeting minutes, which may confirm further pumping of liquidity and caution in the repo market.

As for the economic reports, the most important will be the preliminary composite purchasing managers' index for the services and manufacturing sectors for February, which may indicate an ease in the pace of growth to 52.5 from January's reading of 53.3.

The dollar may be affected by the general trend in financial markets, especially developments related to the spread of the Corona epidemic, which has recently given some support to the US dollar as a safe haven.

Last but not least, any comments from members of the Federal Open Market Committee this week could also affect the dollar's movements.

Pound Sterling

Important data from the U.K, including PMIs, inflation, retail sales and unemployment are likely to guide pound sterling's traders this week.

The flash PMI for the month of February may indicate a decline in growth to 52.5 compared to the previous reading of 53.3 recorded in January, according to analysts' expectations for the preliminary composite PMI that includes the three major sectors.

Analysts also expect the U.K. consumer price index, the measure of inflation preferred by the Bank of England, to stabilize at 1.3 percent in January on an annualized basis.

As for retail sales, it may witness a 0.4 percent increase in January after recording a decrease of 0.6 percent in December.

Euro

The euro is likely to be affected by some important economic data released from the euro zone this week, which may give clues about growth and inflation.

Investors will focus on the preliminary composite manufacturing and services PMI in the euro area, which may show a slight retreat to 51.0 in February from 51.3 in January.

As for the final reading of the consumer price index for January in the euro area, it may confirm an acceleration to 1.4 percent on an annual basis after recording an increase of 1.3 percent in December.  

Commodities

Gold prices increased slightly in the past week as the strength of the US dollar reduced demand for gold bars as an alternative investment.

Prices of the precious metal will depend this week on the important economic data released by major economies, as well as the market reaction to any developments related to the Coronavirus.

With regard to crude oil, prices recorded their first weekly gain in six weeks last week, on assumptions that the major producers will implement greater production cuts to compensate for the slowdown in demand in China.

Data related to global growth, in addition to the weekly US crude inventories report are predicted to shape oil movements this week.

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