Fundamental Comment

Economic Week: GDP reports in Europe, US data

Economic Week: GDP reports in Europe, US data

Financial markets' participants will be on a date with a number of important economic data this week, led by the growth data in the euro area and Britain and data released by the United States, in addition to the continuous follow-up to the latest developments of the deadly Corona virus.  

US Dollar

The movements of the US dollar this week will depend on the impact of economic data from the world's largest economy, as well as any developments related to the spread of the Coronavirus.

For economic reports, the most important will be retail sales and inflation-related reports, as well as Federal Reserve Chairman Jerome Powell testimony before the House of Representatives.

Expectations for retail sales, which largely reflect the size of household spending on goods and services, indicate a 0.3 percent increase in January after recording the same surge in December.

As for the consumer price index, it may show a 0.1 percent rise in January and an acceleration to 2.4 percent from 2.3 percent year-on-year.

Data on the housing, manufacturing sector and consumer confidence may receive some attention from investors.

Last but not least, Powell is scheduled to testify about the semi-annual monetary policy report before the House Financial Services Committee and the Senate Banking Committee in Washington.

Pound Sterling

Sterling investors and traders should keep their eyes open this week, as the UK will release its preliminary GDP report for the last quarter of 2019.

The British economy may have reported no growth during the last quarter after it expanded by 0.4 percent in the quarter ended September, while the economy may have recorded a growth rate of 0.4 percent in December.

Among the most important data that will also be released this week from the British economy are industrial production and the trade balance for December.  

Euro

This week, the euro’s movements will prebaby be affected by the release of important economic data from the euro zone.

The most important report will be the gross domestic product for the last quarter in the euro area, where the second reading is expected to confirm growth by 0.1 percent after recording growth of 0.3 percent in the third quarter.

The European Commission will also release its latest economic forecasts, which include growth projections for European Union member states over the next two years.

Commodities

Gold prices retreated last week as the strength of the US dollar has reduced demand for gold bullions as an alternative investment.

Gold prices will depend this week on the important economic data issued by the major economies, especially the US data, as well as the markets’ reaction to any developments related to the Corona virus.

With regard to oil, prices recovered from their lowest levels in one year at the end of last week after Russia said it supports the recommendation of OPEC and other producers to reduce oil production further, amid the declining demand for crude oil as China continues to combat the Corona virus.

Oil price movements will depend on the state of optimism or pessimism in financial markets in the event of any developments regarding the virus, as well as the weekly US government report on the change in US crude stockpiles.

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