Weekly Outlook | US tariffs, Ukraine war to impact markets

Important events this week:

Last week’s trading was mostly impacted by the implementation of new tariffs on Mexico, Canada and China. Most trading partners will likely be affected by the burden, whereas the price increases will be shouldered by Americans. Companies will likely pass through higher prices to consumers and hence inflation data is likely going to show impact on that.

US equities have finished last week in negative territory with potential negative sentiment moving forward. Furthermore, the meeting between US President Trump and Ukrainian President Zelenskyy did not turn out as expected. A potential end of the war might hence be delayed, which could leave financial markets in distress this week.

– US- ADP employment change –February’s ADP employment change data is expected to be released at 144,000, which would mark a lower reading compared to the January figure, which came in at a stunning 183,000 newly created jobs. However, we can observe that the current data seems not to be enough to keep causing markets to gain traction.

The monthly chart of the AUDUSD currency pair above shows the same picture. Despite the price initially rising in February the month finished trading at lower levels. This might now indicate that the bearish trend will continue. A break of the technical support zone in blue color might hence indicate falling prices ahead. A stronger reading could cause the US- Dollar to gear up steam. The employment data will be published on Wednesday, March 05 at 14:15 CET.

– EU- interest rate decision– It is expected that the ECB will cut rates again during this meeting by 25 basis points. Inflation data in the Eurozone has fallen further, which gives the central bank enough room for another rate- cut. This might boost equities in particular. Also, the Christian Democratic majority of the newly elected government in Germany might be supportive for the economy. Those prospects would hence be helpful for the European equity markets in general. The German DAX might continue its path higher.

Despite the sideways pattern for now the uptrend remains intact. In particular compared to US markets, which had recently started to weaken. Any retracement towards the zone at 21,000 could be used for entry opportunities. The interest rate decision will be held on Thursday, March 06 at 14:15 CET.

– US (Nonfarm Payrolls) labor market report / CA unemployment rate – possibly the biggest news event come from the US with the Nonfarm payrolls report. At the same time Canadian jobless data will also be released. Last month’ data from the US had been weaker than expected, causing the US- Dollar to continue with its slide in the days following the release.

The USDCAD currency pair shows an interesting trend for now. While the market gained early in February, the market weakened towards the end, causing the trend to reverse.

The monthly chart above shows that the uptrend might now continue. Above the 1.4600 level the uptrend might face further positive momentum, while a break of the 1.4200 zone might help the market to weaken again. Both figures will be released on Friday March 07 at 14:30 CET.