Week Ahead – Powell to the rescue

Rising yields spook investors

Jerome Powell’s appearances in Congress next week may come at the perfect time. Rising yields have made investors nervous and the Fed Chair may be the person to put their minds at ease. Meanwhile, Boris Johnson will lay out plans for the easing of the lockdown measures in the UK.

Biden stimulus to make progress in the House

UK to ease lockdown after vaccine success

India GDP in focus on Friday



Wall Street’s main event of the week will be Fed Chair Powell’s testimony on Capitol Hill.  Powell will have two days to answer questions on the Fed’s dovish strategy and at what point rising Treasury yields pose a risk to the recovery.  Another disappointing weekly jobless claims figure points to a weak February payrolls report and that should keep the Fed on autopilot in the short-term. 

House Democrats are planning to move President Biden’s COVID relief bill forward with a vote.  Expectations are still high for conservative Democrats to support the bill’s passing in the Senate by mid-March.  The price tag of the bill might come down and it seems unlikely the minimum wage hike to $15 will get enough support.  


A sluggish start to the vaccine rollout in Europe may explain some of the softer services PMI readings last week and will likely contribute to a slower reopening in the months ahead. Still, restrictions are working as vaccines are rolled out and Covid numbers are improving and that should continue to see rising optimism in the coming months. 

The data next week is tier two and three, including final CPI for the euro area, German GDP, Gfk and Ifo surveys, and French GDP.


The impressive vaccine rollout has traders optimistic about the outlook for the recovery this year. The economy has been among the worst hit by the pandemic but the UK has been among the most successful in rolling out the vaccine which should enable it to reopen soon. Boris Johnson is due to announce reopening plans on Monday starting with schools. 

PMIs were vastly improved but retail sales data highlighted how important it is to get the consumer economy booming again. The UK jobs report is the only notable release on Tuesday next week.


USDTRY is back below 7 after peaking above 8.5 in November; a sign of how far Turkey has come since replacing its central bank governor and finance minister. Traders are increasingly confident in the central bank – under the leadership of Naci Ağbal – to stay the course and not buckle under political pressure.


PBOC continues to maintain USD/CNY fixing around 6.4500 while withdrawing liquidity domestically. Asia FX will remain stable while this continues.

China 1 and 5-year Loan Prime Rate decision Monday. It would be a huge surprise if they hiked and would be a strong negative for equities, positive CNY. Quiet data week otherwise. Geopolitical front is relatively quiet.


India GDP in focus Friday, expected to moderate to -4.5-5.0% YoY. Better number equities positive. 

The Indian Rupee continues to appreciate breaking long-term support at 72.75. The Reserve Bank of India may become more aggressive in currency intervention now to slow appreciation. 

Australia & New Zealand

The RBA minutes were very dovish but the currency and equities are at the mercy of movements on Wall Street. Commodity prices remain very firm, particularly base metals, limiting the downside on both. Slow week data-wise.

Reserve Bank of New Zealand rate decision on Wednesday. The RBNZ will remain unchanged at 0.25% but markets will be focusing on the statement. The RBNZ may signal that NZ has seen the best of its post-Covid recovery until borders open, or signal that monetary policy might tighten sooner than expected. The later scenario will see NZD/USD spike sharply and be negative for equities.


Tokyo CPI, Japan Industrial Production and Retail Sales all released on Friday. In line with PMI readings they are expected to show that export sector recovery continues, but inflation and domestic recovery remain weak. 

The BoJ has signalled that it will continue buying ETF’s as needed and has no intention of selling any. That pushed the Nikkei through 30,000 and should continue next week depending on developments on Wall Street.

The rise in US 30-year yields sparked an aggressive rally by USD/JPY above 106.00 this week. That has since partially been corrected but highlights the sensitivity of USD/JPY to US/Japan rate differentials. Another move higher by US 10 and 30-year bonds next week could see the USD/JPY spike higher to 107.00. USD/JPY is maintaining the breakout of its 9-month falling wedge suggesting higher levels ahead anyway.

Key Economic Events

Saturday, February 20th

– International Atomic Energy Agency Director General Grossi visits Tehran with hopes of salvaging 2015 nuclear deal.  

– Thailand Prime Minister Prayuth Chan-Ocha faces no-confidence vote

Sunday, February 21st

– European Commission President von der Leyen speaks about a “Green New Deal”

Monday, February 22nd

– EU foreign ministers meet to consider new sanctions on Russia over the imprisonment of Navalny.

– ECB President Christine Lagarde speaks at the European Semester Conference.

– Riksbank Deputy Governor Martin Floden presents his view of monetary policy and the economic situation.

– US Treasury Secretary Yellen speaks at the New York Times DealBook conference

– BOE policy maker Vlieghe speaks on the economic outlook.

Economic Data

US leading index

Japan PPI services

Thailand trade

Germany Feb Ifo business expectations: 91.8 estimate v 91.1 prior

Hong Kong CPI

Tuesday, February 23rd

– Iran may curb cooperation with nuclear watchdog inspectors that were agreed upon with the 2015 nuclear deal. 

– Fed Chair Powell delivers the central bank’s semi-annual monetary policy report to the Senate Banking Committee.

– EU European Affairs ministers meet in Brussels to discuss relations with the U.K.

– EU antitrust chief Vestager will speak on digital regulations at the European Parliament.

– Bank of Canada Governor Macklem speaks

– Riksbank Deputy Governor Breman speaks about monetary policy and bank’s mandate

– International Petroleum Week

Economic Data

US FHFA house price index, Conference Board consumer confidence, S&P CoreLogic Case-Schiller home prices

UK Unemployment

Sweden Unemployment

Poland Unemployment

South Africa Unemployment

New Zealand retail sales

China new home prices

Singapore CPI

Hungary rate decision: Expected to keep interest rates unchanged at 0.60%

Wednesday, February 24th

– Fed Chair Powell testifies before the Congress House Committee on Financial Services on monetary policy and the economy

– South Africa’s Mboweni presents budget

– Hong Kong presents annual budget

– EIA crude oil inventory report

– BOE Chief Economist Haldane speaks

Economic Data

US new home sales

Mexico retail sales

Germany GDP

Hong Kong GDP

New Zealand rate decision: Expected to keep Official Cash Rate unchanged at 0.25%

Russia CPI

Thursday, February 25th

– EU leaders begin two-day on travel restrictions and COVID vaccine strategy

– A wrath of Fed speak, Atlanta Fed President Bostic speaks at a banking conference. St. Louis Fed President Bullard discusses monetary policy. New York Fed President Williams takes part in a panel.  Fed’s Quarles discusses Stress Tests

– ECB Vice President de Guindos speaks at an online session of the IESE Alumni Learning Program organized by IESE Business School.

Economic Data

US initial jobless claims, durable goods, second reading of Q2 GDP, pending home sales

Mexico unemployment, GDP, central bank meeting minutes

Eurozone Consumer confidence

New Zealand ANZ business confidence

Australia private capital expenditure

Thailand BoP, trade

Japan leading index

Hong Kong trade

Russia gold and foreign reserves

Friday, February 26th

– Finance ministers and central bankers from the Group of 20 will meet virtually

– The US House of Representatives are expected to have its first floor vote on President Biden’s $1.9 trillion stimulus package.

– ECB Executive Board member Schnabel speaks at European Fiscal Board conference.

– BOE Deputy Governor Ramsden speaks for the Institute of Chartered Accountants

Economic Data

US personal income/spending, wholesale inventories, MNI Chicago PMI, University of Michigan sentiment

Canada industrial product price

New Zealand ANZ consumer confidence, trade

Australia private sector credit

Japan industrial production, housing starts, retail sales

France GDP

Switzerland GDP

Sweden GDP

Iceland GDP

Poland GDP

Denmark GDP, unemployment

Singapore industrial production

Turkey Trade balance

Norway Unemployment

Hungary Unemployment

France CPI

South Africa money supply, trade balance

Sovereign Rating Updates

– Denmark (Fitch, S&P)

– Ireland (Fitch)

– Ukraine (Fitch)

– EFSF (Moody’s)

– ESM (Moody’s)

– France (Moody’s)

– Portugal (DBRS)


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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.