Weekly Analysis (19-23 Feb)

This week in the United States, the focus will be on the Federal Reserve, with the release of the minutes of the FOMC meeting on Wednesday likely to provide valuable insight into the potential timing of future interest rate adjustments. In addition, comments from various Fed representatives will add to these insights. Key economic indicators include the S&P Global PMIs, which are expected to reflect a slight slowdown in both the manufacturing and service sectors. Other important data includes existing home sales, the Chicago Fed National Activity Index, and weekly jobless claims. In Canada, the focus will be on the inflation rate, retail sales, and new home prices, which will provide further insight into the state of the country's economy.
On the other side of the Atlantic, European financial markets are awaiting reports from the ECB's monetary policy meeting, which could shed light on future interest rate developments. Flash PMIs for the Eurozone, Germany, and France are anticipated to show a slight easing in the contraction of private sector activity. Expectations are for an uplift in consumer morale across the Eurozone and an improvement in Germany's Ifo Business Climate indicator from its lowest point since May 2020. Nonetheless, updated Q4 GDP data is expected to confirm a 0.3% contraction in the German economy for the last quarter of 2023. Additional releases include the Eurozone's final inflation figures for January, current account, and construction output, providing a comprehensive view of the region's economic conditions.
In Asia, the spotlight turns to China as the financial and commodity markets reopen post-Lunar New Year, with market sentiment observed for post-holiday effects. Despite the anticipation of economic support measures from Beijing, the People's Bank of China (PBoC) is likely to keep key interest rates steady, balancing a weak yuan with the necessity for supportive monetary policy. The fourth-quarter current account figures are also awaited. Japan will reveal fresh PMI figures and the Reuters Tankan index for February, alongside January’s trade balance, offering insights into the country's manufacturing and business sentiment. In Australia, the RBA's meeting minutes will provide further clarity on the central bank's monetary policy direction, with flash PMIs for February also on the horizon.