The coming week will bring data releases that may reflect economic sentiment in the Eurozone.
Geopolitical and inflationary concerns come to the fore, but at the same time they are being eased by the lifting of COVID-19 restrictions, and manufacturers seem to be experiencing fewer and fewer problems related to broken supply chains or product shortages. These two opposing forces will face off in the survey responses to the PMI indices, the publication of which could dominate next week.
In the U.K., economic activity has returned to pre-poll levels. Card spending is almost exactly at the same level it was two years ago before the virus began to spread. Transport and mobility data suggest that in London, at least, the number of workers heading to jobs has returned to November highs.
Incidence rates have also fallen in recent weeks, and there appear to be fewer cases of COVID-19. Thus, this can be expected to translate into a rebound in the services sector PMI reading next week, although it is worth remembering that these indices have not been as good at capturing GDP changes as they were before the pandemic.
Consequently, the British data could be crucial for the Pound's trading and for expectations of further action by the Bank of England. This one may be focused on any indication of wage pressures. The Bank's survey seems to suggest that UK wages may be rising faster than they have over the past few years. However, there are reasons to believe that the wage-price spiral will not materialize in the UK. The Bank of England may therefore continue to raise interest rates in March and May. Much may depend on what pace of rate hike pricing the financial markets impose.
Finally, a key meeting between the U.S. Secretary of State and the Russian Foreign Minister is expected to take place next week in Europe. Markets may be pinning their hopes on this for a diplomatic resolution of the dispute. If this possibly does not happen, the elevated volatility may persist for quite some time.
Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service)
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79.17% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Trade this news from Conotoxia Ltd. platforms
Go to your account
