Market pauses ahead of FOMC meeting
Currencies Direct April 28th 2014 - 2 minute read
Despite a quiet start to the week today, we have a busy calendar
of data releases to look forward to this week. On Tuesday we have
UK GDP estimates. Recent bullishness in sterling looks set to
continue as estimates of Q1 GDP remain at the top of recent ranges,
0.9 per cent QoQ and an annualised rate of 3.2 per cent. How long
the UK economy can continue with such strong growth is what the
markets are currently trying to discount. The market thinks rate
rises by the Bank of England will be the turning point so the data
will be treated with a degree of caution given the market consensus
BoE is looking at this stage to be the first of the major
central banks to begin raising rates early next year.
Wednesday sees the FOMC meeting, where an announcement on
tapering (no change expected) is made. It is very likely we will
get more information on forward guidance since the Fed revealed in
last month’s minutes that they thought more clarification on FG was
needed. US GDP is due before the central bank meeting, 1.4 per cent
growth is forecast in Q1. It’s a busy week in general for US data
with ISM manufacturing and the non-farm payrolls on Thursday and
Friday respectively. Both are expected to show figures broadly in
line with last month’s release, with the NFP data forecast to be
210K jobs created.
Finally the key Eurozone data is German
unemployment on Wednesday which is forecast to show a small decline
from last month and inflation figures which are finally expected to
show the CPI measure rising again after a period of disinflation.
This month’s release is very important as it will probably guide
ECB policy going forward. If inflation does indeed begin to rise
policy will be on hold for the time being. If the number shows
inflation static or falling then there will be huge pressure on the
ECB to start outright QE over the coming months.
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