Weekly Economic Outlook | 27. Feb - 3 March

More signs for the next moves!

We can determine the central banks' following possible decisions with the varied data we will have this week. US Consumer Confidence and Durable Goods orders, Eurozone inflation, and PMIs from the US, UK, China, and Europe make it essential this week, while with better-than-expected Markit PMI numbers last week, fear of recession returns.

US Durable Goods Orders - Monday

After a sharp rise in December, we expect a decline in January's orders. 5.6% growth in December was primarily thanks to a 17% rise in the transportation equipment category. Therefore, since we have fewer Aircraft orders, overall durable goods orders should reduce by 4% in January. However, excluding transportation, we expect durable goods orders to rise a modest 0.2%. Recently published industrial production figures imply that demand for capital expenditures is dropping and lowering new orders. The US dollar should have an adverse reaction to these expected data.

US CB Consumer Confidence - Tuesday

Overall data says that US economic condition is still stable and encouraging. As one of the leading indexes, Consumer Confidence will explain economies' general situation and outlook. For the US and in February, it is expected to rise to 108.0 from 107.1 in January, leaving the index just short of the 1-year high of 109.0 in December. Also, the present situation index is expected to ease to 150.8 from 150.9. With these estimated data, pressures on Stock markets should remain.

Canada GDP - Tuesday

Bank of Canada stopped or at least paused the rate hike cycle for now, while inflation eased in recent months. Therefore it is time to wait and see the impact of made decisions. However, despite the recent declines, inflation is still high, and regardless of the 1.6% GDP rise in Q4 2022, the growth trends may begin to downshift in the first quarter. For now and with estimated data, Canadian Loonie can benefit from them.

China PMI - Wednesday

As experienced in other economies, the service sector is supposed to improve better than the manufacturing sector after a long time of quarantine. Positive results of China's re-opening should be reflected in February PMI numbers, as both the manufacturing and non-manufacturing PMIs moved back into the expansionary territory in January after spending the whole of Q4 2022 in contraction territory. Expected positive data should help the Shanghai stock markets and Yuan.

Eurozone Inflation - Thursday

As reducing global energy prices and improvements in supply chains eased the inflation in the UK, we expect to see the same reaction in Eurozone as well. Still, it would be a short-lived decrease, as we saw in the US, and in the following months should rise again or stay stable at the current high levels. Therefore, we do not expect ECB to end its rate hike cycle, which means more pressure on EU stock markets.

ISM Manufacturing & Services PMIs - Wednesday & Friday

Therefore we expect Service PMI to have weakening signs despite being above the 50-level. On the other hand, Manufacturing PMI should still rise but under expansionary territory. Estimated data would not be welcomed on Wall Street.