Geopolitical tensions in a light week!
While In Iran and East Asian countries, respectively is Nature day and Ching Ming Festival with Holidays on Monday and Tuesday in China, we could not enter the second quarter with peace! The market will still be focusing on the war in Ukraine, Inflation concerns, and Energy shortages. This week we will not have too much data to move the markets, however, geopolitical tensions and central banks' speakers will be important to see where this economy, is going to go!
US Trade Balance - Tuesday
The United States has a geographical advantage, and it is being far from other countries. This geographical distance made them have less impact from this war. However, international energy prices increase, which will affect producer inflation, is enough by itself to increase concerns. Also, with more negative effects on European and some other economies, it is expected to see the US export increase and help the trade balance to have better condition. It must be positive for the US stock markets overall.
Interest Rate Decision in Australia - Tuesday
On Tuesday, the next round of central banks' decisions will be started. Still, the main question is, should we choose inflation or stagflation? Given the raised uncertainty on the inflation and economic outlook, the RBA is expected to keep policy and interest rates unchanged, which is not in the favor of Australian dollar. This week we also will have the FED and ECB minutes of their March meeting.
US ISM Services - Tuesday
In March, the ISM services index is expected to increase to 60.0, up from 56.5 in February. This may not be in line with geopolitical tensions, however United States is one of the economies that has suffered the least from the war in Ukraine. But if it continues, in the next months it will hit, especially knowing that the supply chain challenges are at their highest point since COVID-19 began.
FED minutes - Wednesday
More than anything else, more light from FOMC members' plan to shrink the central bank’s $9 trillion balance sheet will be interesting for market participants. Regarding the interest rates, after a 25 basis points rate hike in the March meeting, Fed officials, including Chair Jerome Powell, have shown that rate hike can be even more aggressively, but we should not forget that the latest economic outlooks should be more reviewed before any decision and expectation form FED. Anyway, last Friday's NFP numbers can support the 50bp rate hikes in the next meeting.
Canadian Employment - Friday
Unlike other developed economies, the Canadian economy is supposed to benefit from the Oil price increase. Therefore, with increasing inflation and employment numbers, the Bank of Canada increased the rates by 25 basis points in its early March announcement. And now, with expected positive employment data and the unemployment rate down to 5.4%, we can wait for even more tightening policies, in the next BoC meeting, which is positive for the Canadian Dollar.
