Forex Markets Eye Eurozone And US Inflation, US And Canadian GDP

02/28 Wednesday | 13:30 GMT | USD Gross Domestic Product (4Q S)

The second reading of annualized US GDP in Q4’17 is expected to come in at a revised growth rate of 2.5% from the +2.6% reported, still a stark decline relative to the +3.2% growth rate in Q3’17, according to a Bloomberg News survey. Overall, there still seems to be a sharp divide between ‘soft’ and ‘hard’ economic data, with confidence readings surging without a commensurate gain in actual economic activity. The Atlanta Fed GDPNow forecast sees last quarter’s growth at +3.2%, a bit more rich than most surveys. Regardless of the print, March rate hike odds are likely to hold at 100%; any impact on the US Dollar will be on the projected path of rate hikes thereafter (June hike odds are at 76%).

Pairs to Watch: EUR/USD, USD/JPY, DXY Index, Gold

03/01 Thursday | 13:30 GMT | USD PCE Core (JAN)

According to a Bloomberg News survey, US consumer prices were higher on a monthly-basis in January, although price pressures remain weak. The Fed’s preferred gauge of inflation, the PCE Core, is due in at +0.3% from +0.2% (m/m) and +1.5% unch (y/y). The expectation for a reaction depends largely on the perception that the Fed will either accelerate or decelerate their current path of projected rate hikes. As noted in the January FOMC meeting minutes, "Members agreed that the strengthening in the near-term economic outlook increased the likelihood that a gradual upward trajectory of the federal funds rate would be appropriate.” It would appear that traders hoping for a catalyst for a stronger US Dollar are better off looking elsewhere.

Pairs to Watch: EUR/USD, USD/JPY, DXY Index, Gold

03/02 Friday | 13:30 GMT | CAD Gross Domestic Product (4Q)

The first look at Canadian Q4’17 GDP growth is expected to show steady improvement over the prior quarter, even if the growth rate may have slowed down between November and December. GDP is due in at +3.4% for December from +3.5% in November (y/y), but the annualized quarterly GDP reading is due in at +2.1% from +1.7%.Once again, these readings highlight how the base effect in statistics can skew data readings.

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