This week the US economy will gather most of investors’ attention as the week will be loaded with highly significant market moving figures. The Week will open with the US PCE price index one of the Fed’s leading indicators for inflation and a known factor in the Fed’s inflationary outlook. The PCE is expected to point on a balanced inflationary picture with consensus bets pointing on a 2% gain for the PCE index yy in line with the Fed target of 2% annual inflation. Consumer confidence will follow alongside US manufacturing and housing data. The Consumer confidence is expected to still point on subdued consumer spending with investors eyeing a reading of 50 which is considered the minimal reading for consumer expansion. In the Housing sector the Case Shiller index is expected to show dented housing prices alongside the mortgage market index which is expect to be dented as well amid tight credit conditions which continue to pressure on households. The ADP figure will gather the center of attention as investors see the ADP figure as a good barometer for the Nonfarm and unemployment figures which follow after.ADP employment is expected to rise by 40k after falling by -20K the month before, thus confirming investors’ assessments that the US Job market is slowly stabilizing and possibly recovering.
FX trade to be in rage ahead of the Data- Overall after the Dollar sentiment eased towards the end of last week in reaction to the news on an EU consensus to aid Greece. The agreement on a combined guarantee of financial aid to Greece together with the IMF will allow investors to shift their attention back towards pure economic data .Investors trimmed their Dollar bets ahead of this week’s data and are now waiting to see wither the US economy will continue to recover faster than its European peers. Investors will focus mainly on the ADP employment figure as the US job market is known to affect strongly on the Fed rate policy. The housing market will also gather some attention amid the expected exit of the Fed from its 1.4$ Trillion mortgage backed securities program aimed to stimulate the housing market with lower lending rates.
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