Part 2: Coming Week Market Movers
(See Part 1 for prior week market movers)
Early in the week we may see some delayed reaction to the meager boost to the EU firewall weigh on markets, particularly in regard to the EUR and EU stock indexes.
Beyond that, assuming the concerns on the EU remain mysteriously subdued, a typical packed start of month economic calendar should provide most of the market moving events.
This week, we will get significant updates on Chinese, EU, UK, Aussie, and U.S. economic performance. With recent US data disappointing, we'll see whether the US recovery has really lost momentum.
- PMI figures for China, the EU, UK, US, and Canada. China's are expected to show further declines. That may explain why markets ignored signs of improvement from Australia last week
- Minutes from the most recent FOMC meeting.
- Aussie trade and retail data
- Rate statements from the RBA, ECB, and BoE. The first two offer the most potential for insights into future policy
- Friday brings the US monthly non-farm payrolls report and is the most important update on the state of the US recovery. Given the uptick and revisions in jobless claims, there is a very good chance job growth slowed in March. Note that US and some EU markets will be closed for Good Friday, so reaction to the jobs reports may be delayed until Monday.
Consult any good economic calendar like that of forexfactory.com for detail about each event.
Also, keep an eye out for more early reports about Q1 earnings season. Last week CNBC reported that projections for earning growth were looking very grim. Expect reports forecasting earnings season to appear more frequently. They will be important next week, and could begin influencing markets this week too.
Given the strength of the week's calendar, volatility in the coming week should increase and could well take us beyond recent trading ranges in major stock indexes and major currency pairs, particularly the EURUSD.
Lessons & Ramifications: Central Bank Policy Continues To Dominate Markets
The most bullish news we had last week came Monday when Fed Chairman Bernanke's comments raised hopes for new US stimulus, and so sent markets higher because apparently that's the only reason risk assets might justify higher prices - government easy money policy rather than actual improved growth prospects.
Central bank policy remains arguably the single biggest short term market driver in most major economies and for most major currencies.
The problem is, virtually every major central bank "policy" involves trying to inflate away its debt problems via historically low rates and continued stimulus programs that threaten the value of their currencies and anything denominated in them, including your assets. We all need currency diversification just as we need asset and sector diversification.
Disclosure/disclaimer: No positions. The above is for informational purposes only. All trade decisions are solely the responsibility of the reader.