Markets remained highly volatile in the last week as the conflict in the Middle East pushed into its fourth week, with increasing mixed messages on its duration hitting the market from the US side.
Traders and investors alike are confused by messages from the US administration, and particularly from President Trump, which switch from ‘winding down’ to more troop deployments and further action on an update-to-update basis. However, markets are now trading what they are seeing and, for now, the war rages on. The Iranian side have been consistent with their messages that they will fight on.
It is a much quieter week ahead on the macroeconomic calendar, and although traders will react to some key tier 1 data that is scheduled, geopolitical updates are expected to dominate sentiment and market direction, with volatility likely to remain at extreme levels.
Here is our usual day-by-day breakdown of the major risk events this week:
A rare day with absolutely nothing of note on the calendar. However, as above, updates from the weekend and any fresh news from the Middle East should see another lively start to the trading week.
Flash Manufacturing and Services PMI data is due out across all three trading sessions, with data due out of Australia, the UK, the EU, France, Germany, and the US. We also hear from key central bankers, including the RBNZ’s Anna Breman early in the day and the Swiss National Bank’s Martin Schlegel towards the end of the sessions.
Probably the biggest day in terms of data releases comes on Wednesday, with Australian markets in focus early in the day as the ABS releases the latest key CPI numbers. CPI data is also due out in the UK early in the European session, with traders expecting plenty of moves in sterling markets around the release. German IFO data is also scheduled, as well as an update from ECB President Christine Lagarde.
It is very quiet again on the calendar on Thursday, with nothing of note scheduled in the first two trading sessions and just the usual Weekly Unemployment Claims numbers out of the US due early in the New York session.
It’s a quiet day to close out the week as well. The main focus for data will be UK markets again, with Retail Sales numbers due early in the European session. The New York session sees the release of the revised University of Michigan Consumer Sentiment and Inflation Expectations data. However, as with most of the trading days this week, geopolitical factors will likely rule the roost in terms of market influence as the day progresses.
