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China's Data Awaited, Busy Week for Traders Ahead -

Feb, 28th 14:22

OB market outlook

Weekly report Feb 29 to March 04, 2016

U.S. Data Watch

Figures from Commercial Department on Friday showed that U.S economy is expanding with an unexpectedly faster pace in the last quarter than both previous estimate and expectation of economists.

Specifically, preliminary gross domestic product for Q4/2015, which reflects annualized change in the value of all goods and services produced by the economy, grew 1 percent, higher than the advanced reading of 0.7 percent and the forecast of 0.4 percent from Bloomberg survey.

Although the result is the lowest reading in the last three quarters, U.S growth this year is expected to take off on the back of healthier labor market and low gasoline price, which may boost consumer spending-the factor accounts for two-third of U.S economy.

Personal Spending and Income reports for January also showed positive signs of recovery as both figures rose 0.5 percent, successfully surpassing the forecast of 0.3 percent and 0.4 percent, respectively.

In the week ahead, investors will look for the Non-farm Report due on Friday, the last evidence of U.S economy health before March meeting, which may decide whether the Federal Reserve change their interest rate or not.

Beside the NFR, other important reports, which are expected to manipulate investor sentiments, including Unemployment Rate and Average Hourly Earnings, will be reported by Bureau of Labor Statistics on next Friday.

The concern of China’s slowdown and unclear fate of the Britain in the European Union, not to mention the shadow on the deal between major producers, seems to inducing Fed official to wait for more instructions from the market.

In spite of the fact that there is so small chance of Fed to continue tightening its policy this month amid the turbulence of global market, unexpected low unemployment rate and improved hourly earnings may change the game.

Asian and European Market Outlook

The first half of next week may witness some turmoil if China’s manufacturing activity slows down, again. The selloff in global equities, which has taken place twice since the beginning of this year, tends to happen whenever worse-than-expected data from the second largest economy is released.

Other PMI reports from Japan and European Union members such as Italia, France and German will be reported next week.

Britain’s Manufacturing PMI, Construction PMI and Services PMI will be published one by one by Markit along 3 days from the 1st to the 3rd of March. The reports are highly expected amid the division of U.K leaders about this country’s membership status in the EU. The Pound was hit hard, down more than 2.8 percent against U.S dollar and 1.2 percent against the single currency.

On another part, the Reserve Bank of Australia’s monetary policy meeting is so close. A rate cut is expected in the meeting due on March 1, in the context that many central banks including BOJ and ECB, already stands in the territory of negative interest rate.

Commodity market

On Wednesday, U.S. Energy Information Administration (EIA) will publish the change in the number of barrels of crude oil held in inventory. The number consistently increased in the last three reports, pushing pressures on crude price and commodity currency like the Loonie.

The negotiation between OPEC and non-OPEC members is still on tracks. To boost the deal, Russia expected to have a talk with Iran this week, especially after Arab Saudi, the largest producer of Organization of Petroleum Exporting Countries, delivered its unwillingness to cut output as the kingdom has no trust in its allies.

Gold, the most popular safe haven asset, swung between losses and gains, and closed lower last week at $1,222.30 per troy ounce. In the second half of the week ending on Feb 26, the precious metal failed many times to reach the high of 1263.37, which was recorded on Feb 11.

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