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العربية
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16 April

By Ahmed Mamdouh

Category: Fundamental Comment

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This Week: China GDP, political events to shape sentiment

Investors will focus this week on the release of a spat of important economic data from major economies, led by China’s GDP, as well as trailing the situation in Syria and the latest updates from the trade war between the U.S. and China.

Analysts predict that the Chinese economy would grow an annualized 6.8 percent in the first quarter of this year, similar to the expansion pace recorded in the last quarter of 2017.

Mainly, investors focus on China GDP figures as it provides clues about the global growth during the first three months, amid trading war concerns between the world’s two biggest economies.

The market sentiment showed some improvement at the end of last week as both U.S. and China seemed to be open to negotiations about their trade, while Trump dialed down launching a military attack on Syria.

US Dollar

The U.S. dollar remained under pressure last week, amid geopolitical concerns in Syria and trade war woes between the U.S. and China, where this week the eyes will continue to remain on the latest updates.  

This week, the focus will be on the release of important economic data including, retail sales, housing starts and industrial production.

However, retail sales could get more attention as it mainly reflect the strength of consumer spending.

Retail sales volume probably have soared 0.4 percent in March, following a 0.1 percent fall in February, according to median estimates.

Pound Sterling

Last week, the pound traded near record highs versus the U.S. dollar and euro, taking advantage of weakness in both currencies, in addition to easing Brexit concerns and rising bets of an interest rate hike by the BOE in May.

The movements of the pound sterling this week will probably rely on important economic data including inflation, unemployment, and retail sales.

The consumer price index may signal a rise to 2.8 percent in the year ended March from 2.7 percent, according to analysts’ projections.

As for the unemployment report, the wage growth for the three months through February is predicted to surge to 3.0 percent from a previous of 2.8 percent.  

Retail sales may have dropped 0.3 percent last month after a robust 0.8 percent growth in February.

Euro

This week, the most important data from the euro area will be the final CPI reading for the year ended March that may confirm a 1.4 percent increase, which is still far from the ECB target.

The shared currency retreated last week after ECB minutes for March policy meeting warned of the euro’s strength and a trade war with the United States.

Commodities

Last week, gold’s movements were largely triggered by political reasons, as prices rose at the beginning of the week then wiped off most of the gains with fears ebbing at the end of the week.

Hence, haven demand was largely the key driver to gold prices last week and this means that investors will continue to track the latest updates on the political front.   

Regarding oil, it climbed to the highest level since late 2014 while locked the strongest weekly gain since July the previous week on escalating tensions from Syria that raised concerns about disruption of oil supplies from the oil-rich Middle East.

However, some analysts believe that oil prices would come under pressure once again as the market is still suffering from a glut of production, where the EIA government report signaled that U.S. oil output hit a new fresh record of 10.53 million barrels per day in the week ended April 6.

U.S. crude inventories probably soared by 0.5 million barrels in the week ended April 13 after a 3.3 million-barrel increase a week before, the EIA report due this week may show.

Ahmed Mamdouh

Ahmed Mamdouh is the head of the English Fundamental Analysis at D1stp.com, with 9 years of experience in the financial markets. Mamdouh holds a Master’s Degree in Economics from The American University in Cairo and a Bachelor Degree in Economics from The Faculty of Economics and Political Science, Cairo University.