Key points from this week

RBNZ sounds more upbeat

At the bank’s February meeting the RBNZ kept rates on hold as expected. However, the bank’s outlook and assessment was a little more upbeat than many were anticipating, seeing NZD trading firmly higher in reaction. The bank noted the risks from corona-virus though said that it expects the impact to be limited. While the bank said it will be monitoring data and developments, it expects no further rate cuts this year.

Equities break out

Benchmark global equities prices improved this week despite the ongoing corona-virus outbreak which has caused global panic over recent weeks. While new cases of the disease continue to emerge globally, new deaths are being seen primarily in China only which is helping to alleviate some of the uncertainty. Currently, equities traders seem more focused on the recent improvement in global manufacturing data which has improved on both the UK and US.

OPEC Cuts Oil Demand Outlook

The Organisation of Petroleum Exporting Countries slashed its 2020 demand outlook for WTI Crude in response to the ongoing corona-virus outbreak. The cartel has lowered its demand projections in China by around 20% alone. In light of these downward revisions, many players now expect that the group will announce further production restrictions when it meets next in March to review the current measures.

Key Events Next Week

RBA Meeting Minutes

The RBA held rates unchanged at its last meeting though, with downward revisions to growth, there were still signals that further easing could be needed. The market will now be keen to learn the full details around these discussions.

FOMC Meeting Minutes

The Federal Reserve kept rates unchanged at its last meeting and noted a general improvement in underlying conditions. However, the risks from corona-virus were cited as a threat and the market will now be looking to see just how serious a threat the Fed deems the virus to be and if any members considered easing.

UK CPI

UK inflation data will be on close watch this week. The BOE held rates unchanged at its last meeting, though with downward revisions to its economic forecasts, the bank’s outlook noted concern. If inflation data disappoints this week, this could see a fresh build in BOE easing expectations.

ECB Meeting Minutes

The minutes from the ECB’s first meeting of the year will also be a key release this week. Lagarde announced the start of the ECB’s year long strategy review at the last meeting. The ECB chief also warned markets that the bank’s monetary policy would not be on auto-pilot over this period. The market will now be keen to see how much of a discussion there was around potential further easing.

Keep An Eye On

European & UK PMI Data Sets

German, French, UK and US manufacturing PMIs will be released next week and traders will be keen to see if there has been any improvement in the global factory sector or if the outbreak of corona-virus has seen reduced activity. Following some pickup last month, a further recovery would be a strong boost for investor appetite while weak figures will be received with disappointment.

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