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FOMC Minutes in Spotlight, U.K. GDP, Canada Retail Sales Awaited

Feb, 19th 17:26

U.S. shares advanced on Friday, rescued by gains in Kraft Heinz which helped offset declines in energy stocks. The Dow Jones Industrial rose 0.02 percent to end at 20,624.05 and closed the week 1.7% higher. Meanwhile, the S&P 500 added 0.17 percent to 2,351.16, up 1.5 percent for the week and the Nasdaq Composite climbed 0.41 percent to 5,838.58, contributing to a weekly rise of 1.8%.

Among 11 major S&P sectors, eight of them rose with consumer staples leading gainers. Shares of Kraft Heinz soared nearly 11% after the food company said that it would continue to pursue a $143 billion bid for Unilever despite being rebuffed. That gain helped counteract loss in the energy sector which resulted from a slide in oil prices.

The U.S. dollar also recorded a bullish week as it rose versus almost of its peers except for the Japanese yen. Most of the U.S. economic data reported last week outstripped expectations. While both PPI and CPI index beat economists’ forecast, U.S. retail sales also satisfied investors by increasing 0.4% last month. Upbeat data sustained the bull run in the greenback after Federal Reserve Chair Janet Yellen said in testimony to the U.S. Senate that the central bank would likely rise interest rates at one of its forthcoming meetings.

Financial markets in the U.S. will be closed for the Presidents Day holiday on Monday before flash numbers on Manufacturing PMI and Services PMI for February come out on Tuesday.

On Wednesday, the Federal Reserve is to release the minutes of its most recent policy meeting which will be scrutinized for clues on the timing of the next rate hike. Fed fund futures priced in a less than 20% chance of a rate hike in March but odds of a June increase was seen at around 70% following Fed Chair Yellen’s testimony.

Besides the highly awaited FED minutes, investors will look to U.S. housing data due on the same day. The National Association of Realtors is to release data on existing home sales for January which is forecast to add 1.0% to 5.55 million, following a decline of 2.8% a month earlier. The advance may come as a result of the rise in consumer spending and inflation which tend to translate into higher house prices and a pick-up in home sales.

New Home Sales scheduled to be published on Friday is expected to show a jump of 7.2% to 575,000, following a drop of 10.4% in December.

The euro weakened broadly amidst rising concerns over anti-European Union Marine Le Pen winning the presidency in the second-round runoff. The pair EUR/USD was down 0.55% to 1.0614, holding above the five-week lows of 1.0520 set on Wednesday.

In the week ahead, the euro zone is to publish preliminary data on manufacturing and service sector activity for February on Tuesday after France and Germany release their own PMI reports. On Wednesday, participants will be focusing on Wednesday’s IFO survey data on German business confidence to gauge sentiment in the euro zone’s largest economy.

For Sterling, there is not many economic data that may move the market significantly except for the second estimate on U.K. fourth-quarter economic growth published by the Office for National Statistics on Wednesday.  The report is expected to confirm the previous reading that indicates the economy grew 0.6% in the final three months of last year.

No major economic reports were released from Canada last week but this week, retail sales figures for December due on Wednesday and consumer price inflation for January due on Thursday will draw market attention. While retail sales are expected to climb 0.8% in December, inflation may have increased 0.3% last month.

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