FX Week Ahead: U.S Inflation, SNB and Norges Bank meetings

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Final GDP releases

Economic data for the week ahead will slightly take a back seat with only a few central bank meetings lined up. The Swiss National Bank will be holding its quarterly monetary policy meeting this week. The 3-month LIBOR rate is expected to remain unchanged. Later, the Norges bank will be holding its monthly monetary policy meeting.

Norges bank is expected to keep monetary policy unchanged but the market expectations are pointing to the fact that the Norges bank could potentially look at sending hawkish signals for the markets. Expectations are that the Norges bank could start to hike rates as early as September this year.

On the economic front, data from the U.S. will be dominated by the producer price and consumer price index. While producer prices are expected to rise sharply, inflation is expected to remain largely stable. Retail sales data will also be coming out this week.

Here’s a quick recap of the key economic events due this week.

U.S. Inflation data and retail sales before next week’s FOMC meeting

The week ahead will a lot of inflation related data, retail sales and regional manufacturing index reports. Consumer price index data will of course take the top spot with the data coming out just a week before the FOMC meeting.

According to the economists polled, the headline inflation in the United States is expected to rise at a slower pace of 0.2% on the month in February. This marks a modest decline compared to 0.5% increase registered in January. Core inflation rate is expected to rise just 0.2% compared to the 0.3% increase seen the month before. The annual inflation rate in the U.S. is thus forecast to rise 2.2% on the year, slightly higher than the 2.1% increase seen previously. Core inflation data is expected to remain unchanged at 1.8%.

Retail sales report for the week ahead will show a 0.3% increase on the headline which is expected to reverse the declines of 0.3% seen the month before. Core retail sales excluding autos is expected to rise 0.3%, up from a flat reading the month before.

Producer price index data will also be coming up this week with forecasts pointing to a 2.8% increase on inflation at the factory gate. This marks a modest increase from 2.7% previously. Core PPI is expected to surge 2.6%, advancing from 2.2% increase registered in the previous month.

For the remainder of the week, the weekly initial claims and the regional manufacturing surveys will be reported. On Thursday, the U.S. import price index will be coming out with forecasts pointing to a 0.3% increase.

Norges bank interest rate decision

Norway’s central bank, Norges bank will be holding its monetary policy meeting this Thursday. Expectations are fast growing that the central bank will signal a hawkish bias. This comes due to the increase in growth momentum over the past few weeks.

Recent inflation data which also increased further supports the view that the central bank could be looking towards normalizing monetary policy. No changes are expected at this week’s meeting but the central bank’s statement could potentially prepare the markets for the first rate hike in September.

Swiss National Bank expected to keep rates steady

The Swiss National Bank will be holding its monetary policy meeting this week. The quarterly meeting is expected to see the central bank keeping the 3-month LIBOR rate unchanged. SNB officials are unlikely to make any major changes in terms of the forward guidance either.

For the most part, the SNB’s interest rate decision could pass off as a non-event.

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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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