Positive US Data Might Support Fed Tightening

Weekly Report - 28/02/2016

US Data Positive, Euro Area Anemic

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Positive economic data from the US together with subdued growth from Eurozone saw a brief return of monetary policy divergence across the Atlantic. The Yen which was seen trending stronger since January this year started to ease back as US economic data shows signs of supporting further Fed rate hikes this year.

Weekly Review

Economic data from the US released this week showed a robust start to 2016 and a better than expected end for the Q4 of 2015. Durable goods orders for the month of January increased at the fastest pace in 10 months on the back of increasing demand and lifting hopes that the US manufacturing sector was showing signs of a rebound. Data released by the US commerce department showed that orders for durable goods surged 4.90% while non-defense capital goods orders were up 3.90%.

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The Week Ahead

A new trading month brings along a lot of economic releases starting with PMI data from the Euro zone, the UK and the US. Most importantly, this week will see the Reserve Bank of Australia's (RBA) monetary policy meeting due on 1st March. Overnight rates are expected to remain unchanged at 2.0%, as the RBA is likely to wait for more economic data before changing policy. Following the RBA's decision, this week will also see the quarterly GDP data from Australia which is expected to rise at a slower pace of 0.50%.

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