The following week is an exceptionally busy one with the Chinese returning back to their desks and a raft of UK and US economic numbers.
They’ll be a huge amount of focus on trade developments between the US and China this week as the next round of talks are set to take place. The 2 nations are currently within a 90-day truce period which is scheduled to run out on March 1st. Time is running short and if the truce period ends without a deal Trump is set to impose significant tariffs on China. The US are set to press the Chinese on a number of longstanding issues such as the theft of US intellectual property in the area of technology. The better the talks go, the more likely it is a deal will be struck, the higher the chances of a stronger US dollar. While Fed policy is now entering a less aggressive more neutral phase, interest rate hikes cannot be ruled out should there be a positive outcome from the US/China trade dialogue.
On the data front, we’ll see a slew of economic releases from both the UK and US this week. Domestically, GDP numbers released today will be exceptionally important. The numbers will reflect Q4 2018 and will be heavily scrutinised as we’re set to depart from the European Union next week. Additional important releases include inflation numbers on Wednesday and a retail sales report on Friday. Brexit developments will also be closely eyed. From the US, inflation and retail sales are the two key reports. The Fed and market participants will likely use these to gauge just how well the US economy is doing and, as a result, whether the greenback should be stronger or weaker.
Written by Viv Savani. 8:32am, February 11th 2019
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