London 26/03/2012 - Traders will focus on Europe this week - a series of economic surveys and data will be scrutinised for signs of improvement in the economic environment.
Beyond the data, traders will also remain cognisant of the fact that the EU finance ministers are due to decide on how to increase the size of the present bailout funds this week, while Spain is also due to announce its Budget on Friday. Both present risks to the economic bloc.
German Consumer Confidence, which is due on Tuesday, is forecast to have stalled in response to higher fuel prices. But French Consumer Confidence is forecast to be buoyed by presidential campaigning.
Wednesday will be an important day for ECB watchers - money supply data will be closely watched for signs that last month's 529.5-billion-euro long-term refinancing operation (LTRO) has actually increased private-sector loans.
A lack of growth could raise negative sentiment in EU markets by affirming that there is no evidence that the LTRO programme has feed into the real economy. Such an outcome would be at odds with ECB president Mario Draghi's belief that "the worst is over, but there are still risks. The situation is stabilising".
On Thursday, EU unemployment data should reveal the true extent of economic differences between euro nations. Germany, for example, is set to report an unchanged unemployment rate of at 6.8 percent, while the rate for the eurozone as a whole is seen at 10.5-10.7 percent. In the south, unemployment rates in Spain and Greece are forecast to remain above 20 percent.
Inflation in the eurozone is forecast to fall to 2.6 percent in March from 2.7 percent previously. While this is positive, it remains well above the 2.0-percent benchmark set by the ECB.
The UK and the US are also due to release their respective final fourth-quarter GDP figures. The UK data is seen at a 0.2-percent contraction for the final quarter, putting the annual growth rate at 0.7 percent.
The US growth rate is seen at 3.0 percent but some market observers forecast an increase on higher consumer spending and because of the new data addition - healthcare spending - in the GDP calculation.
An up-to-date read on US manufacturing in the form of Chicago PMI is due on Friday. The forecast is for a fall to 63 from 64. Finally, an improving employment outlook should lift UoM consumer confidence.
On Friday, the Spanish government is due to release it latest budget report. The Centre Right People’s Party's failure to win an outright majority in Andalucía in weekend elections raised concerns that the government will be limited in the amount of austerity that it can reasonably impose. Insufficient austerity could affect this new government’s credibility with bond markets.
European economic ministers (ECOFIN) are due to meet next weekend and vote on a package to increase the EU’s present firewall.
German Chancellor Angela Merkel indicated last weekend that she could support a package where the eurozone's two rescue funds - the European Financial Stability Facility (EFSF) and the European Stability Mechanism (ESM) - run in parallel until 2013. At this point the firewall would return to 500 billion euros - the original size of the ESM - from 940 billion euros.
It is, however, noteworthy that 200 billion euros of the 940 billion euros has already been earmarked or given to Ireland, Portugal and Greece. This leaves the true size of the bailout fund closer to 700 billion euros. The other area of interest will be the extent of the IMF’s contribution to this bulked-up fund.
(Editing by Mark Shaw)
Economic data for the week commencing on March 26
| TIME | |||||
|---|---|---|---|---|---|
| Sydney | Tokyo | Ha Noi | HongKong | LonDon | NewYork |
| Prices By NTGOLD | ||
|---|---|---|
| We Sell | We Buy | |
| 37.5g ABC Luong Bar | ||
| 5,234.00 | 4,834.00 | |
| 1oz ABC Bullion Cast Bar | ||
| 4,351.00 | 3,971.00 | |
| 100g ABC Bullion Bar | ||
| 13,943.60 | 12,843.60 | |
| 1kg ABC Bullion Silver | ||
| 1,686.00 | 1,336.00 | |
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