A look at the day ahead in European and global markets from Vidya Ranganathan.
It’s another tense day for currency traders as the will-they-or-won’t-they debate heats up over Japan’s intervention to buy the yen. Friday holidays in most countries around the world, with the exception of Japan, China and parts of the US markets, make them even more nervous.
The currency’s brief plunge on Wednesday to a 34-year low of about 152 per dollar prompted an emergency meeting of Japan’s three main monetary authorities, which market participants interpreted as imminent direct intervention to stop what those authorities see as speculative currency trading.
The dollar returned to the 151.30-151.50 yen range, a move that will continue if hedge funds and speculators begin covering their substantial short yen positions.
Meanwhile, Chinese authorities are trying to soften the impact of the yen’s weakness on the yuan, which hit a four-month low last week.
In Europe, the data calendar is uninteresting: final UK fourth-quarter GDP data and German employment figures.
UK GDP contracted by 0.3% in the final quarter of 2023 and by 0.1% in the previous quarter, meeting the definition of a technical recession widely used in Europe. The economy returned to growth in January.
In Germany, the Bundesbank has already said that Europe’s largest economy may be in recession in the first quarter of 2024. .
However, the Bundesbank said companies continue to retain workers and unemployment could rise only slightly in the next quarter.
The US will release the Federal Reserve’s preferred inflation gauge on Friday, even though markets there are closed.
The core price index for personal consumption expenditures (PCE) is estimated to have risen 0.3% in February, keeping the annual pace at 2.8%. Analysts forecast the overall index to rise 0.4% for the month and 2.4% for the year.
Key events that could impact markets on Thursday:
Data: UK Q4 GDP, US Q4 GDP, German employment, US consumer spending, University of Michigan US consumer sentiment.
Earnings: Scout24, Sofina
Debt auctions: UK resumes repayments of one-month, three-month and six-month government debt
(Vidya Ranganathan; Editing by Christopher Cushing)