Navigating an environment of tepid nominal growth and near-zero or negative interest rates was never going to be easy. Still, the events that have unfolded since the Federal Reserve’s first rate hike in almost 10 years last December easily surpassed the imagination of most central bankers, observers and investors alike.
European stocks continued to be mixed fluctuating between gains and looses. Meanwhile, European leaders had a meeting in Brussels on Friday in an attempt to hammer out a deal with Turkey that would
relocate thousands of migrants from Greece to Turkey. In return, Turkish citizens would be granted the ability to travel within the European Union without visas.
We forecast slower global growth and lower inflation than in our last Global Outlook in November. An expected, policy-induced re-acceleration in China should lift activity in Q2 but is unlikely to add sustained momentum to global growth.
During previous days, the observed currencies managed to go through some notable ups and downs.
Despite recent volatility and a longer-term economic transition under way, China still offers growth opportunities. Here are crucial themes to watch and weigh.
"The economy’s engines are not going into reverse … but at the moment, it is hard to see GDP with a 2 percent handle. Based on today’s lackluster sales report, policymakers will be in no hurry to raise interest rates"
Growth and inflation have picked up a bit, which we expect the FOMC to acknowledge. The Fed’s LMCI fell in both January and February, but we think the strength in the core employment indicators from both the household and establishment survey data supports the conclusion that labor markets have improved since the FOMC’s last meeting.
The Sterling refuses to edge lower and appears to be headed towards the resistance line above 1.49. However, the Cable is first required to pierce through the supply area at 1.4446, represented by the monthly R1, which limited the pair’s volatility on Friday. The 1.44 psychological level is also playing a part in the pair’s ability to appreciate, thus, due to no impetus present to push the Pound higher today. As a result, a corrective decline is likely to take place, but the bearish momentum could fail to exceed the 1.4345 mark, as the 55-day SMA and the weekly PP are providing immediate support there.
