Week Ahead

Central banks in the US, Brazil, Japan, the UK and Turkey will be deciding on monetary policy in the coming week, while key data to watch for include US and China industrial output and retail sales; Japan and Canada inflation data; UK consumer morale; Australia employment figures and retail trade; New Zealand Q4 GDP; and India wholesale prices.
The US Federal Reserve is seen holding the target range for the federal funds rate steady at 0-0.25 percent at the end of its two-day meeting on Wednesday, with investors eager to hear if the central bank will take any measures to bring bond yields down. Last week, Fed Chairman Jerome Powell said that the economic reopening could boost inflation temporarily and that the US economy was going to start to see stronger employment in the next few months. Still, the Fed chief also said that the central bank was still a long way from its inflation and employment targets.

On the economic data front, retail sales and industrial production numbers for February are seen pointing to a decline in domestic trade and a slowdown in factory activity growth. Other publications to watch for are building permits and housing starts, foreign trade prices, NY Empire State Manufacturing Index, Philadelphia Fed Manufacturing Index, NAHB Housing Market Index, business inventories, and overall net capital flows.

Elsewhere in America, policymakers in Brazil will probably leave interest rates at the current levels when they meet Wednesday. Other key data to follow include Canada inflation rate, retail sales and housing data; Mexico fourth-quarter aggregate demand; Chile fourth-quarter GDP and current account; Colombia industrial production and retail sales; Peru monthly GDP figures and unemployment rate; and Argentina fourth-quarter current account.

In the UK, the Bank of England will decide on monetary policy, but no changes are expected as investors take a wait-and-see approach and monitor the effects of Covid and Brexit on the economy. Key data to follow include Gfk consumer confidence and public sector net borrowing.

Elsewhere in Europe, investors will turn their attention to the Eurozone foreign trade, construction output and fourth-quarter wage growth; Germany investor morale, producer and wholesale prices; Sweden inflation rate; and Italy, Spain and Switzerland trade balance numbers. Also, policymakers in Norway and Russia will probably hold interest rates at current levels, while the central bank of Turkey is seen raising them by at least 100 bps amid inflation concerns.

In Asia, the Bank of Japan might make changes to its yield band control when it holds a policy meeting on March 18-19. Also, the country will be publishing updated data for core machinery orders, foreign trade and inflation rate. Elsewhere, all eyes turn to China’s industrial production, retail sales, unemployment rate and fixed asset investment for the first two months of the year. Market forecasts point to near record increases in both factory activity and domestic trade following the sharp contractions seen in the same period of 2020 due to the COVID-19 crisis.

The Reserve Bank of Australia will be releasing the minutes of its latest monetary policy meeting. Investors in Australia will also focus on employment figures, retail sales and fourth-quarter house price index. Other highlights for the Asia-Pacific region include: New Zealand fourth-quarter GDP and current account; India wholesale prices; Indonesia trade balance; and South Korea and Hong Kong unemployment rates. Central banks in Indonesia and Taiwan will be deciding on interest rates.