With a lack of tier one US data, there is something of a quieter week in prospect for the economic calendar this week. However, aside from the housing data and durable goods, traders will be looking towards the flash PMIs for a glimpse at how the first quarter is drawing to an end. Flash PMIs are also the main focus elsewhere amongst major economies. However, traders looking at UK assets will have more to keep them interested, with inflation and retail sales later in the week.
- North America – US flash PMIs in addition to New and Pending Home Sales and Durable Goods
- Europe & Asia – Flash PMIs for Australia, Eurozone, and the UK, in addition to UK inflation and retail sales.
- LatAm – The Central Bank of Mexico rates decision and mid-month inflation for Mexico and Brazil
North American data:
- Richmond Fed Manufacturing (Tuesday 22nd March, 1400GMT) The survey is expected to turn slightly negative at -1 in March (from +1 in February)
- US New Home Sales (Wednesday 23rd March, 1400GMT) Sales are expected to increase to 810,000 in February (up from 801,000 in January)
- EIA Crude Oil inventories (Wednesday 23rd March, 1430GMT)
- Weekly Jobless Claims (Thursday 24th March, 1230GMT) Claims are expected to be around similar levels again, with 218,000 (214,000 last week)
- US Durable Goods Orders (Thursday 24th March, 1230GMT) Core durables (ex transport) are expected to decline by -1.0% in February (after a rise of +0.7% in January).
- US Flash PMIs (Thursday 24th March, 1345GMT) Consensus is looking for a slight deterioration in March with Manufacturing expected to drop to 56.8 (from 57.3), Services to drop to 56.0 (from 56.5) and the Composite to fall to 55.4 (from 55.9)
- Pending Home Sales (Friday 25th March, 1400GMT) Pending sales are expected to fall by -3% on the month and to have declined by -11% for YoY in February (-9.5% in January).
- Michigan Sentiment - revised (Friday 25th March, 1400GMT) Final sentiment is expected to be unrevised at 59.7 in March (59.7 prelim March, 62.8 final February)
Several lower-tier US economic releases could move the USD, but the primary focus will be on the Flash PMIs. These are the first look at the growth trend for March. Given the breakout of war in Europe, the consensus is looking for a reaction on the PMI surveys. Consensus is looking for a reduction of around half a point across the sectors, and weighing similarly on the composite PMI. This points to only a marginal impact on growth, so should not hit the USD too badly. It is also worth keeping an eye on the Richmond Fed survey, after the divergence of the Philly Fed and New York Fed data last week.
- USD traders may only pay minor attention to the housing data, whilst Michigan Sentiment is expected to be unrevised. The Flash PMIs could be where the action is though. A downside surprise would be initially USD negative, but perhaps would be limited by the safe-haven appeal of the USD.
Europe & Asia:
- Eurozone Current Account (Tuesday 22nd March, 0900GMT) The current account surplus is expected to shrink to +€23bn in January (down from +€25.6bn in December.
- UK CPI (Wednesday 23rd March, 0700GMT) Headline inflation is expected to jump to 6.0% in February (from 5.5% in January), with Core CPI increasing less strongly to 4.5% (from 4.4%).
- Eurozone Consumer Confidence (Wednesday 23rd March, 1500GMT) Confidence is expected to tumble to -23.5 in March (down from -8.8 in February)
- Australia flash PMIs (Wednesday 23rd March, 2200GMT) Flash manufacturing is expected to slide to 55.0 in March (from 57.0 in February) with services expected to drop to 55.1 (from 57.4). This would drag the Composite PMI at 54.5 (down from 56.6)
- Swiss National Bank monetary policy (Thursday 24th March, 0830GMT) No change is expected to the rate of -0.75%.
- Eurozone flashes PMIs (Thursday 24th March, 0900GMT) Flash manufacturing is forecast to decline to 55.0 in March (from 58.2), with flash Services falling to 53.3 (from 55.5). This would pull the flash Composite PMI down to 54.0 (from 55.5)
- UK flash PMIs (Thursday 24th March, 0930GMT) Flash Manufacturing is expected to fall to 57.1 (from 58.00) with flash Services falling to 58.8 (from 60.5). This would mean the Composite PMI falling to 57.8 (from 59.9)
- UK Retail Sales (Friday 25th March, 0700GMT) Core sales (ex-fuel) are expected to see a growth of +1.3% for the month in February which would mean YoY growth of +5.0% (down from +7.2% in January)
- German Ifo Business Climate (Friday 25th March, 0900GMT) The Ifo is expected to drop slightly to 98.2 in March (from 98.9 in February).
The PMI surveys of major economies started to move decisively higher at the start of the year, suggesting that 2022 has started well. However, for March, where the survey responders react to the war in Ukraine, we are expecting a notable decline. Eurozone, UK and Australian flash PMIs are all looking for around a -2 point decline on its composite data. This would begin to reflect what analysts and central banks are expecting to be the hit to growth in the coming months. Any downside surprises to the forecasts will be seen as negative for the respective currencies. For now, the PMIs of Western economies are still showing solid growth prospects for Q1 but moving into Q2, the question will be how much of a drag the war in Ukraine becomes.
UK inflation is expected to continue to increase this week, with headline CPI expected to see 6.0%. There will be an upside risk to this in the February data with the breakout of war in Ukraine and commodity prices soaring. The Bank of England is also talking about potentially 8%. With wage growth picking up again, this will also pull core inflation higher too.
- Flash PMIs to impact EUR, GBP and AUD this week, with the potential for downside surprises which would be negative for the respective currencies.
- UK inflation and retail sales will cause further volatility for GBP. Upside surprises to the inflation numbers would put more pressure on the Bank of England to tighten policy faster and be supportive for GBP.
- Mexico first half month inflation (Thursday 24th March, 1200GMT) The first look at March headline inflation is expected to show a monthly increase of +0.63% to increase the YoY inflation up to 7.4% (from 7.2%)
- Mexico Retail Sales (Thursday 24th March, 1200GMT) Sales are expected to fall by -0.3% on the month but this would improve the year on year sales to 6.2% in January (from 4.9% in December).
- Central Bank of Mexico interest rates (Thursday 24th March, 1900GMT) A +0.25% rate hike to 6.25% is expected (from 6.00% previously)
- Brazil mid-month inflation (Friday 25th March, 1200GMT) The consensus is looking for YoY inflation to fall slightly to 10.69% (from 10.76% previously).
Inflation is always a key focus for Lat Am economies, as the central banks continue to battle against the negative economic impact of rising price levels. Consensus is looking for Mexican inflation to increase by around +0.2% to 7.4%, with the Central Bank of Mexico also looking to hike rates by +0.25% on Thursday. Brazilian inflation is expected to drop slightly at the mid-month reading by around -0.1% to c. 10.7%, which would mean interest rates being more than +1% higher than inflation.
- Mid-month inflation for Mexico and Brazil will be key for MEX and BRL respectively.
This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. INFINOX is not authorised to provide investment advice. No opinion given in the material constitutes a recommendation by INFINOX or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.