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What to expect next week - 05.03 - 09.03.2018

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In fact, what will move the markets in the first few minutes of the new week will be the elections in Italy. Expectations at the moment are that none of the parties will get a full majority and make a government. This means that the party gathered the most votes will have to conclude a coalition with one of the other to form a government. Surveys show that Silvio Berlusconi's bloc will be able to collect about 40 percent of the votes, while the other two parties, the "5-star Movement" and the Democratic Party, will collect less than 30 percent. What one should watch out for traders is a possible victory for the 5-star Movement, which would destabilize the financial markets and disturb the Italian partners in the EU. There may be an inability to form a government and early elections before the end of the year. When making the largest percentage of 5-star Movements, the EUR will start trading downward and the stock markets will deepen the adjustment. With the elections in Italy and the ECB's decision on interest rates, the focus will be on Europe, but we must not forget the states where the uncertainty surrounding Trump's trade war is growing. On Friday we expect Non Farm Payrolls. The consensus forecast for new jobs is 200,000, while average hourly wages have risen to $34.4. Given the Italian and NFP elections in the US, we are expecting a turbulent week for EUR/USD. Taking into account Trump's intentions for additional import levy on industrial metals, we expect industrial metal markets to continue to rise. If the restrictions on the White House come into force, it will significantly limit the flow of metals worldwide and lead to increased stockpiles by companies and downsized production, as the disposal of production will be more difficult. If we follow the simple logic of supply and demand, less output and increased demand would result in a significant price increase. On Friday, we expect Bank Of Japan's decision on the basic interest rate. Expectations to change interest rates are 0.00%, or in other words, the interest rate remains unchanged for sure. For this reason, we do not expect the decision to have a strong impact on the JPY. The yen will be driven mainly by the results of the Italian elections, the US NFP, and the developments surrounding the White House's intentions to impose an additional levy on imports of industrial metals in the United States. On Thursday, we expect the ECB's key interest rate decision. And there, as in Japan, interest rate expectations are zero, but in Europe investors will be watching closely the ECB press conference, from which we will seek signals for future monetary policy changes.

Economic calendar for next week - 05.03 - 09.03.2018

Monday
02:30 Australia - Building permits
03:45 China - Services PMI
10:55 Germany - Services PMI
11:00 Eurozone - Services PMI
11:30 UK - Services PMI
12:00 Eurozone - Retail Sales
16:45 USA - Services PMI

Tuesday
02:01 UK - Retail Sales According to BRC
02:30 Australia - Retail Sales
05:30 Australia - RBA Interest Rate Decision
10:15 Switzerland - CPI
23:40 Australia - Speech by Phillip Lowe - RBA Governor

Wednesday
02:30 Australia - GDP
03:30 USA - Speech by Robert Kaplan - FED member
10:30 UK - Halifax House price Index
12:00 Eurozone - GDP
15:15 USA - ADP Non Farm Payrolls
15:30 Canada - Trade Balance
17:00 Canada - BoC interest rate decision
17:30 US - Crude Oil Inventories

Thursday
01:50 Japan - GDP
02:30 Australia - Trade Balance
05:00 China - Trade Balance
08:45 Switzerland - Unemployment rate
14:45 Eurozone - ECB Decision on the Base Interest Rate
15:30 Eurozone - Press conference of the ECB
23:45 New Zealand - Credit card retail sales

Friday
Tentative - Decision of the Bank of Japan's Basic Interest Rate
03:30 China - CPI
09:00 Germany - Industrial production
11:30 UK - Trade Balance
11:30 UK - Industrial Production
15:30 USA - Non Farm Payrolls
15:30 USA - Average hourly wage
15:30 USA - Unemployment rate
15:30 Canada - Unemployment Rate


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