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- What to expect next week – 12.03 – 16.03.2018
What to expect next week - 12.03 - 16.03.2018
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Loading...In the new week, investor attention will fall on import tariffs introduced by Donald Trump. Trump's announcement of tariffs on steel and aluminum has sparked worries around the world about trade war. However, they became a fact - 25% on steel and 10% on aluminum. On Friday, last week, Trump said that "when a country loses billions of dollars in trade with virtually every country it trades with, trade wars are good and very easy to win." The tariffs will come into force in the next 15 days, and from the start of the new week, the White House will invite all negotiating parties. During them, Washington promised that issues related to NAFTA would also be resolved. European stocks will face a challenge again. The departure of Gary Cohn led to an initial dollar decline as he was the last opponent of import tariffs, and following the decision of the ECB on the key interest rate and Dovish moods among central bank members - EUR / USD, was down. Over the past few weeks, everyone has been talking about a trade war, resignations in the Trump's cabinet, and almost a market crash. It turned out, however, that the introduction of import tariffs on industrial metals would not be the first in the history of modern capitalism. In early 2002, George Bush also took such action. When Bush imposed a 30% import tariff on steel, the dollar dropped significantly and the SP500 dropped by nearly 30 percent. What we should note, however, is the behavior of European stocks that literally collapses. The Stoxx 600 is down nearly 50%. The reason for this is the backward correlation between EUR and European stocks. Since the introduction of tariffs, the euro has grown strongly against the USD and other major currencies. We are unlikely to see such market crashes in the present as the world economy is now stronger than ever, and in the past, when Bush introduced import tariffs, the markets were still under the influence of the Dot-Com bubble. What we are sure to observe in the new week is increased volatility in both the stock and the FX market. With growing economic uncertainty, we can conclude that the rise in JPY and gold is the most likely scenario in the coming months. Regarding the indices, consolidation near the peaks is very likely.
Traders will also focus on Consumer Price Data (CPI) on Tuesday. One of the main reasons for the correction from the beginning of February in the indices is the fears of high interest rates and uncontrollable inflation. The CPI will give fresh directions to everyone if these fears have been exaggerated or fully justified. The Fed's aim is to smoothly raise interest rates as inflation slowly reaches its 2% target, but if the news shows faster than expected inflation - fears can again take the best of investors and lead to further downs.
Economic calendar for next week - 12.03 - 16.03.2018
Monday
01:50 Japan - BSI Large Manufacturing
04:00 China - Foreign Direct Investment
19:00 USA - 10-Year Bond Auction
21:00 USA - Budget Balance
Tuesday
06:30 Japan - Industry Activity Level
12:00 Germany - ZEW Economic Sentiment
14:30 USA - CPI
16:30 Canada - BoC Gov Poloz Speaks
Wednesday
01:50 Japan - Monetary Policy Meeting Minutes
04:00 China - Industrial Production
12:00 Europe - Industrial Production
14:30 USA - Retail Sales
23:45 New Zealand - Gross Domestic Product
Thursday
14:30 USA - Initial Jobless Claims
14:30 Canada - ADP Employment Change
Friday
06:30 Japan - Industrial Production
12:00 Europe - CPI
14:30 USA - Building Permits
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