U.S. – Russia ‘war of words’ influencing the market sentiment, while U.S. – China trade conflict may see further escalation

Apr 17 • Morning Roll Call • 1329 Views • Comments Off on U.S. – Russia ‘war of words’ influencing the market sentiment, while U.S. – China trade conflict may see further escalation

Traders will be keeping a close eye on the geopolitics and the trade talks, as further developments will more than likely have a high impact on the markets. After the US President, Donald Trump had tweeted on Saturday, praising the US-led intervention in Syria as ‘perfectly executed’ and ‘missing accomplished’, Russia did not stand silent and its’ President, Vladimir Putin called the intervention an ‘act of aggression’ and the Russian ambassador to the US warned of ‘consequences’. In case that the current war of words between America and Russia escalates, it is expected that the market sentiment could take a hit.

As this was not enough, the US-China trade conflict may escalate further as the White House is still to announce which goods categories will be subject to a 25% tariff. Of course, China will not remain silent and would be quick to announce a retaliation.

Nevertheless, according to the analysts in Nomura, anticipate the US economy to stay strong throughout the 2018 and another 4 hikes from the FOMC may be expected; inflation is also anticipated to climb higher. The growth is boosted by tax-cuts and a pick-up in government spending, while jobs remain above the long-term sustainable pace.
The retail sales for the US yesterday came with a better than expected with 0.6% as opposed to 0.4% forecasted, supporting the expectation of strong economy with strong consumer confidence.

This week we can expect mixed UK data, where further hastening in wage growth may be enough to ensure BoE rate hike next month. According to the Developed Markets Economist at ING, James Smith, there is just under a month until the BoE next meeting and the possibility of a rate hike in high. The recent Brexit progress and signs of rising wage growth means that markets have a rate rise in May almost priced in and none of the BoE speakers made any attempts last week to halt the expectations. It is suspected that the policy makers have more or less already made up their minds and the anticipated rate hike is close. In addition, on Wednesday we are expecting the UK Consumer prices and Producer prices.
From the US, Wednesday will bring us analysis in the Beige Book, prepared for the 1-2 May FOMC meeting and it is expected to provide useful framework for the investors reaction to the aggressive trade policy announcements we have been hearing from the Trump administration.

JPY Revised Industrial Production m/m
GBP Average Earnings Index 3m/y
GBP Claimant Count Change
GBP Unemployment Rate
EUR German ZEW Economic Sentiment
EUR ZEW Economic Sentiment
CAD Foreign Securities Purchases
CAD Manufacturing Sales m/m
USD Building Permits
USD Housing Starts
USD Capacity Utilization Rate
USD FOMC Member Williams Speaks
USD Industrial Production m/m
USD FOMC Member Quarles Speaks
NZD GDT Price Index

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