The US economy continues to recover, as consumer spending showed strong gains in March. The Eurozone continues to grapple with high Covid rates and many parts of Western Europe are under lockdown. In the UK, a successful vacccine rollout has led to further easing in health restrictions.
In the upcoming week, the ECB and Bank of Canada will hold policy meetings. The UK releases key inflation and employment data.
Eurozone CPI posted a gain of 1.3% in March, up from 0.9% a month earlier. Inflation remains below the ECB target of 2% but is gaining strength.
In the UK, March PMIs signaled strong economic growth. Services PMI improved to 56.3, up from 49.5. This was well into expansionary territory, above the 50-level. Construction PMI jumped to 61.7, up from 53.3. This showed the strongest rate of construction output growth since September 2014.
Forex Weekly Outlook: Fed, BoE stay dovish, Powell testimony next
fxstreet.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from fxstreet.com Daily Mail and Mail on Sunday newspapers.
The US dollar has given up some ground after a strong rebound in early January. Covid continues to run rampant in the US and Europe, but there is optimism that the roll-out of Covid vaccines will bring about economic recovery later in the year. This week’s highlights include the Fed rate decision and GDP reports in the US, France and Canada.
German CPI posted a respectable gain of 0.5% in December, confirming the initial estimate. However, Eurozone CPI came in at -0.3% for a fourth straight month.
The ECB maintained its interest rate and bond-buying levels at this week’s policy meeting. ECB President Lagarde acknowledged that Eurozone GDP for Q4 would likely be negative but said that growth was expected to rebound in 2021. PMI reports showed that the manufacturing sector remains well in expansionary territory, but the services sector is in a state of decline, with readings below the 50-level, which separates contraction from expansion.
There was positive news last week as Covid vaccines are being rolled out, but political crises such as Brexit and US fiscal stimulus continues to preoccupy the market. The upcoming week has inflation reports and central bank decisions in the US and Canada.
In the UK, the monthly GDP report continues to slow, and fell to 0.4% in October, its lowest level in six months. The Brexit negotiations are in full gear, but the sides have not been able to thrash out a deal, and the pound took it on the chin this week as a result.
Eurozone GDP rebounded 12.5% in Q3, just shy of the forecast of 12.6%. At its final policy meeting of the year, the ECB maintained its main interest rate at 0.00% but implemented further easing. The bank increased its pandemic recovery fund by EUR500 billion, to a total of EUR1.85 trillion. German CPI fell by 0.8%, its fourth decline in five months.
vimarsana © 2020. All Rights Reserved.