The week ahead in the financial markets will certainly be an interesting one, with a plethora of big economic data being released, central bank announcements and corporate earnings season getting into full swing after Alcoa got things underway last week, as Craig Erlam, market analyst at Oanda noted.
Already this morning we’ve had the March trade figures from China which didn’t exactly get the week off to the most positive of starts, although investors don’t exactly appear too worried about them as the Shanghai composite sits 1.5% higher on the day.
Exports fell by 15% compared to the same month last year, an enormous miss from the 12% rise that was forecast, while imports also fell short of expectations, falling by 12.7%. At first glance, it’s easy to be disappointed but once February’s 48.3% surge in exports are taken into consideration, the forecasts seem quite optimistic. The January and February figures are usually averaged out to account for the impact on the Lunar New Year but when you see a number like that in February, you have to expect it to impact the March reading which I think it clearly has.
The rest of the day is looking a little quieter with only a few low impact economic reports scheduled for release but with so much to come, I don’t expect this to effect trade much. There are some very important figures being released this week such as UK CPI, US retail sales, Chinese GDP, Eurozone CPI and UK jobs data, not to mention the latest monetary policy decision from the ECB. We quite often see caution creeping in at the start of such an important week and I expect this to be no different.
Compounding this is earnings season, which for the US in particular is expected to be quite grueling. The strong dollar, challenging weather conditions and lower oil prices are going to be a common theme in the first quarter but with all this priced in, you wonder whether the bar has been set low enough for the usual low expectation rally.
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