Central Banks in Focus!
The week ahead will be the Monetary policy week, as several central banks, including central banks in the United States, Japan and England will come together to decide how should react to geopolitical tensions and inflation. This is while the Russia and Ukraine conflict, still, creating uncertainty across the markets, and patience will be the most practical advice to traders in such conditions.
China Retail Sales and Industrial Output- Tuesday
The first real data from China, which will cover the 2022 economic improvement will be out on Wednesday. Retail Sales and Industrial productions, both are expected to increase by 3% and 3.9% respectively, while the unemployment rate also will be out and estimated to show the 5.1% for February. Ahead of the Paralympic in China, COVID-zero policy with stringent restrictions that came after some reports about a renewed outbreak of cases early this year eased the Chinese PMI numbers which we had last weeks. Also, with the current geopolitical conflict, we are expecting to see gradual and uneven economic development in the following months.
FED monetary policy meeting. - Wednesday
FOMC members will come together on Tuesday for two days meeting. The main subject in this meeting will be the rate hike and its digit. Will that be 25 or 50 basis points? Going towards any of them will tell us how we should judge the decision, is that Hawkish or Dovish. While along with fast-increasing CPI, market participants were waiting for a rate hike, Mr. Powell's testimony, where he said that Fed would be “careful” as it removed stimulus, and now they are not willing to add any further market volatility, cooled the fans of stricter policies. Hawkish policies will add pressure on the stock markets and lift the US dollar and vice-versa.
US Industrial Production - Thursday
Apparently, the producers' troubles have no end. While they were fighting with a labor shortage and supply chain disruption, now they have other factors also to watch, faster-increasing row materials and energy price, which for sure will add the production price. Overall expectations for industrial productions are positive with 0.5% raise during February. However, in the coming months, we have to wait and see the fate of war! Since the market focus will be FED meetings and headlines from Ukraine, we are not expecting to see a significant effect of these data on the market.
Bank of England policy meeting - Thursday
The Bank of England also in this week will hold its monetary policy meeting against a backdrop of elevated—and accelerating—inflation, while uncertainty caused by war, will affect the economic development, and it may put the pause on BoE way to stricter policies. Due to inflation concerns, investors are waiting for another 25-bp policy rate hike to 0.75%, and repeating that in the next months, which would make the Bank of England's policy rate finish 2022 at 1.50%. This expected decision is supposed to lift the Sterling against its crosses.
BoJ monetary policy meeting - Friday
We already know that there is a gap between Japanese and other developed economies' monetary and rate policy, as they ate not facing inflation concerns yet. Therefore, as BoJ governor, Mr. Kuroda has been emphasized, for Japan, there is still the need to keep easing, and they have time to go towards policy normalization. Therefore we do not expect any change in their current policy, which will put more pressure on the Japanese Yen but can lift the stock markets.
