Welcome to the Investors Trading Academy economic
calendar of the week. Each week our news analysts review the upcoming economic events that you
should be monitoring. This week brings both the Bank of Japan and the Federal Reserve.
Each of these meetings can stoke significant volatility, and if we judge based upon the
reactions from last week ECB action, liquidity will likely remain subdued as the potential
for risk aversion remains high. The previous BoJ meeting turned out to be
pretty disastrous: The bank made an unexpected move to negative interest rates which, by
design, should spurn capital flows out of the currency. The exact opposite happened,
and massive Yen strength emanated from that move to negative rates. With hindsight it
appeared that this surprise move shocked markets to the point of risk aversion.
The big question is whether they’ll take that risk again, or whether they’ll look
to extend of increase their QE program. Also risk will come from the latest US central
bank policy meeting, US political primaries, the Budget and the meeting of the Bank of
England’s rate-setters set to figure prominently. The Fed are not expected to change their policy
settings when they next meet on 16 March, however there is keen interest in what the
latest set of macroeconomic and interest rate projections from Fed policymakers.
Likewise, her press conference after the meeting will be extremely important to gauge how the
Federal Reserve’s reaction function might, or might not, be adapting to the heightened
volatility seen in global capital markets at the start of the year.
Nonetheless, and as the Fed itself has always been keen to point out, it is ‘reactive’ or
data-dependent to use their own words. The Budget announcement on Wednesday will
be another key event, with economists at Credit Suisse expecting it will deliver more “aggressive”
fiscal consolidation in coming years than in the Autumn statement, which at the margin
will likely be negative for growth in Britain. Among other considerations, the Budget may
well factor into the Monetary Policy Committee’s deliberations and policy announcement scheduled
for the next day. In the US investors will be watching if GOP
front-runner Donald Trump succeeds in making off with his party’s nomination for the Presidency.
A raft of US data is also set for release throughout the week, with the latest retail
sales and consumer price figures, on Monday and Tuesday, respectively, possibly among
those that might provoke the largest move in market prices.
Eurozone consumer price data referencing the month of February, on Thursday, are expected
to show the price level in the single currency area slipped at a 0.2% year-on-year pace.