5 Things to Watch on the Economic Calendar

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In the holiday-shortened week ahead, market players will focus on comments from Federal Reserve Chair Janet Yellen for further hints on the timing of the next U.S. rate hike and clues on how the central bank plans to pare back its balance sheet.

Investors will also keep an eye out on a few U.S. economic reports before the long Easter weekend, with Friday’s inflation and retail sales data in the spotlight.

This week also marks the start of the first-quarter earnings season in the U.S.

Meanwhile, in the U.K., market participants will be looking ahead to reports on consumer prices and employment for further indications on the continued effect that the Brexit decision is having on the economy.

Elsewhere, China is to release what will be closely watched trade and inflation data amid ongoing concerns over the health of the world’s second biggest economy.

Ahead of the coming week, Investing.com has compiled a list of the five biggest events on the economic calendar that are most likely to affect the markets.

1. Fed Chair Yellen Speaks

Federal Reserve Chair Janet Yellen is set to speak at the University of Michigan at 4:10PM ET (20:10GMT) on Monday. Audience questions are expected.

Her comments will be monitored closely for any new insight on policy and the timing of when the Fed will next raise interest rates.

The Fed chair could be asked about the U.S. central bank’s plan to start shrinking its massive balance sheet, which ballooned to $4.5 trillion in wake of the financial crisis.

The Fed has not yet offered details on how it would reduce its holdings of Treasurys and mortgages but said it would like to start later this year.

Another topic of interest will be the Fed’s concern that the stock market may be overvalued, as revealed in last week’s minutes from the central bank’s March policy meeting.

The Fed’s next meeting is scheduled for May 2-3 while investors currently expect another rate hike in June, according to Investing.com’s Fed Rate Monitor Tool.

2. U.S. March Inflation & Retail Sales

The Commerce Department will publish March inflation figures at 8:30AM ET (12:30GMT) Friday. Market analysts expect consumer prices to ease up 0.1%, while core inflation is forecast to increase 0.2%.

On a yearly base, core CPI is projected to climb 2.3%. Core prices are viewed by the Federal Reserve as a better gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories. The central bank usually tries to aim for 2% core inflation or less.

Rising inflation would be a catalyst to push the Fed toward raising interest rates.

At the same time Friday, the Commerce Department will publish data on March retail sales. The consensus forecast is that the report will show retail sales fell 0.1% last month, after gaining 0.1% in February. Core sales are forecast to inch up 0.2%, after rising 0.2% a month earlier.

Rising retail sales over time correlate with stronger economic growth, while weaker sales signal a declining economy. Consumer spending accounts for as much as 70% of U.S. economic growth.

Besides the inflation and retail sales reports, this week’s calendar also features U.S. data on producer prices, initial jobless claims, as well as Michigan consumer sentiment.

Headlines from Washington will also be in focus, as traders await further details on U.S. President Donald Trump’s promises of health care and tax reform.

3. U.S. Q1 Earnings Season Kicks Off

Wall Street’s first-quarter earnings season kicks off this week, with major U.S. banks JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC) all reporting Thursday.

The financial sector is projected to post a 15.4% profit gain, second only to energy among S&P sectors, with revenue rising 7.5%.

For the broader market, earnings are forecast to grow 10.1% from a year ago, the best since 2014, while sales growth is expected to jump by 7.5%, the best since 2011, according to Thomson Reuters. data

A strong earnings season would help justify pricey stock valuations, with the S&P 500 rallying this month to its most expensive since 2004 on a forward price-to-earnings basis.

4. U.K. CPI & Employment for March

The U.K. Office for National Statistics will release data on consumer price inflation for March at 08:30GMT (4:30AM ET) on Tuesday. Analysts expect consumer prices to rise 2.3%, unchanged from a month earlier.

At 08:30GMT (4:30AM ET) Wednesday, the ONS will publish the monthly jobs report. The claimant count change is expected to fall by 3,000 in March, with the jobless rate holding steady at 4.7%. Wage growth including bonuses is forecast to rise 2.2%.

Recent data has pointed to signs that rising inflation, caused in part by the pound’s post-Brexit vote tumble, is crimping spending by consumers, the main drivers of the economy, just as Prime Minister Theresa May begins Britain’s EU divorce talks.

5. China March Trade Data

China is to release March trade figures at around 03:00GMT on Thursday (11:00PM ET Wednesday).

The report is expected to show that the country’s trade surplus widened to $10.0 billion last month from a surprise deficit of $9.15 billion in February. Exports are forecast to have climbed 3.2% in March from a year earlier, following a decline of 1.3% a month ago, while imports are expected to rise 18.0%, after increasing 38.1% in February.

Additionally, on Wednesday, the Asian nation will publish data on March consumer and producer price inflation. The reports are expected to show that consumer prices rose 1.0% last month, while producer prices are forecast to increase by 7.6%.

China’s economy grew 6.8% in the fourth quarter, boosted by higher government spending and record bank lending. But the economy still faces headwinds from a cooling housing market and possible protectionist measures from the U.S.

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