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US Open Preview – Safe havens advance on political risks; European equities inch up
March 16, 2018 1:26 pmVideo
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Here are the latest developments in global markets:
Day ahead: US data flow continues; US politics in the spotlight
US data will continue to dominate the calendar today ahead of a relatively quiet week for economic releases out of the US. However, today’s numbers are expected to have a little impact on the FOMC rate decision announced on Wednesday, while any updates on the trade story could give another round of volatility for the dollar before a crucial G20 meeting kicks off between March 17-20.
At 1230 GMT, February’s building permits are expected to ease to 1.320 million contracts after reaching a multi-year high of 1.377 million in the previous month. Housing starts, delivered at the same time are also estimated to come in lower in the aforementioned month. On the other hand, readings on industrial production which slowed down by 0.1% in January are now anticipated to grow by 0.3% in monthly terms. Finally, JOLTs job openings for the month of January and the University of Michigan consumer sentiment index for the month of March (preliminary) will inform on the US new vacancies and consumer confidence at 1400 GMT.
While encouraging numbers could bode well for the dollar, positions on the currency could be on the defensive since concerns over a global trade war continue to hang in the background. The recent staff changes in the White House, including the resignation of the economic adviser, Gary Cohn, and the firing of the Secretary of State, Rex Tillerson, and now whispers of a potential departure of the national security adviser, Herbert McMaster, left investors scratching their heads about how serious Trump is about taking a punitive trade stance against the rest of the world. Therefore, any political news that could worsen the already negative sentiment, could offset any gains arising from potentially positive data.
Next week, it will be interesting to see how FOMC members, who will meet to decide on monetary policy between March 20-21, will respond to the trade turbulence. Note that the markets are widely expecting the Fed to pick up rates next week, however, considering the chaos in the White House, we wonder whether the FOMC board will adopt a dovish stance on the country’s economic outlook.
Meanwhile in Canada, January’s manufacturing sales will attract attention at 1230 GMT, while in energy markets, traders will be waiting for Baker Hughes to report on the US oil rig count at 1700 GMT.
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