Fed’s Policymakers To Deliver Speeches, PM Theresa May Triggers Brexit Process Next Week

U.S. shares closed mixed on Friday after the House of Representatives withdraw an amended health-care bill, which would repeal and replace parts of Obamacare, as Republicans needed to overhaul the U.S. healthcare system. At the close on NYSE, the Dow Jones Industrial Average slumped 0.29% to close at 20,596. Meanwhile, the S&P 500 and the S&P 500 added 0.11% and 1.19%, respectively.

After Republicans pulled their bill as chances of passing the President Donald Trump’s bill appeared slim amid a lack of votes, House Speaker Paul Ryan, in an update to reporters, said that the withdrawal of the health care bill would make tax reform more difficult, adding fears that the setback in health care reform could dampen the success of future legislation being passed.

On the back of rising concerns over Trump’s ability to push through his economic agenda, including tax reform, U.S. stocks remained weak. For the week, the S&P 500 fell 1.4 percent, its worst weekly decline of the year. Benefitting from uncertainty concerning the strength of the U.S. stock market and a broad based selloff in the dollar, haven assets such as gold and Japanese Yen strengthened. The precious metal recorded another weekly gain despite a dip on Friday while USD/JPY slumped to a four-month low.

In the week ahead, a handful of Federal Reserve policymakers, including Chair Janet Yellen, are scheduled to make public appearances. Chicago Fed President Charles Evans and Dallas Fed President Rob Kaplan will start the week by delivering their speeches on Monday, followed by comments on workforce development challenges in low-income communities by Fed Chair Janet Yellen on Tuesday.

Also on Tuesday, Kansas City Fed President Esther George, Dallas Fed President Kaplan and Fed Governor Jerome Powell are on tap before Wednesday’s speeches by Chicago Fed’s Evans, Boston Fed President Eric Rosengren and San Francisco Fed President John Williams. Thursday sees Cleveland Fed President Loretta Mester, Dallas Fed’s Kaplan, San Francisco Fed’s Williams and New York Fed President William Dudley make public appearances while Minneapolis Fed President Neel Kashkari and St. Louis Fed President James Bullard will roundup the week on Friday.

Besides Fed’s officials’ appearances which are expected to provide markets with clues on the likelihood of higher interest rates in the months ahead, traders will also look to a final reading of U.S. fourth-quarter economic growth which will be released on Thursday. Final figures on U.S. Q4 GDP are forecast to show that the economy expanded at a healthy 2% annual rate in the final three months of 2016. If confirmed, this would be an upward revise compared to a preliminary estimate of 1.9%.

In addition, U.S calendar also features data on consumer confidence due on Tuesday, pending home sales on Wednesday, weekly report on jobless claims on Thursday. Friday witnesses figures on personal income and spending, which includes the personal consumption expenditures inflation data, the Fed’s preferred metric for inflation.

Contributing to moving markets, headlines from Washington will also be in focus with traders awaiting further details on President Donald Trump’s promises of tax reform and other developments concerning Trump’s plan to replace Obamacare program.

Sterling closed lower on Friday, paring a weekly gain as investors concerned over the process of Britain to leave the European Union which will be trigged next week. British Prime Minister Theresa May is set to trigger Article 50 of the Lisbon Treaty on March 29 when she formally announces Britain’s withdrawal from the bloc by sending a letter to European Council President Donald Tusk. Negotiations between London and Brussels will start in the coming weeks.

Aside from Brexit-related developments, a final reading on U.K. fourth-quarter economic growth scheduled on Friday will draw markets’ attention as investors will continue to assess the effect of the Brexit decision on the economy. The report is expected to confirm the previous reading that showed the economy grew 0.7% in the final three months of last year, which translated to a growth of 2.2 percent on a yearly basis.

In Europe, traders will be looking for flash inflation figures for March due on Friday which are anticipated to show consumer prices’ rally slowed to 1.8% from a gain of 2% in February. Core prices’ gains are also expected to ease to 0.8% from a rise of 0.9% in the prior month.

The China Federation of Logistics and Purchasing is to release data on March manufacturing sector activity on Friday with expectations for a modest improvement to 51.7.

 

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