RBNZ to signal patience; US retail sales and UK GDP to be the highlights of a calm week

RBNZ to signal patience; US retail sales and UK GDP to be the highlights of a calm week

The Coronavirus outbreak continues to attract all the attention, China’s central bank may have managed to stabilize the markets by injecting billions of dollars into the financial system, but investors will still be keeping a close watch on how successful authorities are in curbing the spread of the coronavirus. And although some reports considered that the spread of the virus levelled off somehow last week, the virus economic impact to Chinese growth is still unknown and if businesses decides to remain shut for a longer time periode, markets will quickly have to price in further demand destruction, and of course Wall Street will also feel the impact. However, if the number of cases outside of Hubei continues to slow and the death rate remains low, the markets’s focus will start gradually shifting towards other things.

Fed Chair Powell’s testimony in his semi-annual congressional hearing on Tuesday and Wednesday will focus heavily on the coronavirus, the “new risk” to the economic outlook.  Congress will want further clarity on what the Fed is prepared to do and how will the coronavirus impact their current plans with the growing of the balance sheet.

Earnings season will also deliver critical updates from Alibaba, Cisco, Toshiba and along with several car and plane manufacturers.

On the data front, things are expected to be quiet, with not much in terms of major releases on the week’s calendar, most importantly the fourth quarter GDP estimates for the UK and on the latest retail sales figures in the US. The Reserve Bank of New Zealand will be the only central bank to hold a policy meeting but is unlikely to excite as it will probably keep rates on hold.

Releases and events are as follow:

Monday

– FOMC Member Bowman Speaks (13:15 GMT)

– Canadian Housing Starts and Building Permits (13:30 GMT)

Tuesday

– UK GDP Q4 (09:30 GMT)

– ECB President Lagarde Speaks (14:00 GMT)

– Fed Chair Powell Testifies (15:00 GMT)

– BOE Gov Carney Speaks (15:35 GMT)

Wednesday

– RBNZ Interest Rate Decision (01:00 GMT)

– RBNZ Monetary Policy Statement (01:00 GMT)

– RBNZ Rate Statement (01:00 GMT)

– RBNZ Press Conference (02:00 GMT)

– Eurozone Industrial Production (10:00 GMT)

– Fed Chair Powell Testimony (15:00 GMT)

– Crude Oil Inventories (15:30 GMT)

– RBNZ Gov Orr Speaks (19:10 GMT)

Thursday

– RBA Gov Lane Speech (00:15 GMT)

– EU Economic Forecasts (10:00 GMT)

– US CPI m/m (13:30 GMT)

Friday

– Germany GDP Q4 (07:00 GMT)

– Eurozone GDP Q4 (10:00 GMT)

– US Retail Sales (13:30 GMT)

– US Industrial Production (13:30 GMT)

– US Michigan Consumer Expectations (15:00 GMT)