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Friday, March 29, 2024

A Look At The Upcoming Calendar As The Sleepiest Week Of The Year Arrives

Courtesy of Tyler Durden

The upcoming week will be largely one where absolutely nothing happens. Anemic volumes will continue to be anemic, outflows will continue, and nobody will care about news flow or technicals. That said, here is Goldman’s analysis of the few items that actually may matter globally in the upcoming 7 days.

What Matters in FX Next Week: Getting Ready for the Holidays

On the policy front, the US Senate voted for the bipartisan fiscal package late in the week and the European summit established a stabilization mechanism (ESM) for crises past 2013 to replace the temporary EFSF. An unexpected and positive development was the agreement for the ECB to raise its capital in order to reign in potential challenges from volatility in its asset (or collateral) portfolio. Finally, on the data front we had a positive surprises from the Philly Fed survey and the IFO posted new record highs with future expectations trending strongly to the upside and confidence in the German retail sector hovering at levels not seen since the early nineties.

In terms of our views, as we have forewarned, we have revised our US growth forecasts on the back of the US fiscal package. We now expect real GDP to rise by 3.4% in 2011 and 3.8% in 2012 (up from 2.7% and 3.6% respectively). It is hard to gauge where consensus exactly lies in terms of actual numbers as the latest surveys are slightly outdated by now. But we were above consensus in our initial forecasts in early December and it is likely that we remain so. In FX space we have already argued, stronger US growth is reducing a bit of the USD downside potential and we have revised our EUR/$ forecasts in early December to 1.50 in 12 mths time (from 1.55 initially). However, the expected widening balance of payments deficit continues to justify a bearish Dollar path and after the latest forecast round perhaps even so against economies with large exposure to the US like Canada or Mexico.

The week ahead will be a quiet one as the market gears down for the holidays. The most important release systemically will be the Durable Goods Orders on Thursday; we expect a small decline of 1%mom. We will also get the third estimate of US GDP on Wednesday. Also interesting to watch will be the MPC meetings in CEE3 economies.

Monday 20th
Hungary Monetary Policy After last month’s surprise hike from the NBH to deter capital outflows another hike is not unlikely but it is a very close call.

Wednesday 22nd
US GDP Third Estimate We expect the third estimate for Q3 GDP to come in around 2.5%qoq annualized. This is not far from consensus of 2.8%.
UK Minutes of the MPC Meeting The Committee has been criticised in some quarters for taking its eye off rising inflationary pressures. The November Inflation Report still has a central forecast that shows inflation comfortably below target in 2012. The MPC may see next week’s minutes as an opportunity to reassure people that it hasn’t forgotten its primary objective.
Poland Monetary Policy Meeting No change in monetary policy stance. Latest inflation data has been mixed. We do not expect hikes until Q1 2010.
Czech Monetary Policy Meeting We do not anticipate a change in monetary policy.

Thursday 23rd
US Durable Goods Orders We expect a small decline of 1% mom vs consensus of -0.7% mom.
US New Home Sales Housing Data is key to follow as it is an area of risk for US growth ahead. We expect a 4% mom rebound in new home sales relative to -8.1 before vs consensus expectations of 6%.

Friday 24th
Russia Monetary Policy Meeting We expect the central bank to leave rates unchanged in the December meeting.

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