It’s a very important week for trading. Traders will be on the edge due to the fact that the US banks have started the first quarter’s earnings. JP Morgan, BlackRock and Morgan Stanley will report their numbers Wednesday. On Thursday, we will hear the earnings results of Citigroup, Wells Fargo and Morgan Stanley. When it comes to bank earnings, traders would be focusing on two aspects. They would like to hear what Wall Street giants think about the Fed’s current policy. Their profit margins will be more valuable if they have a higher interest rate environment. These two factors will likely influence their price action this week.
The US CPI number is another important event traders will be closely watching. The CPI number for the United States will be released Tuesday. The forecast is for 1.2%. Already, inflation is way too high. If the actual number is even higher than forecast, volatility will be much greater in equity, forex, fixed-income markets. A strong inflation number will likely cause traders to be concerned. This will confirm that the Fed is more likely than 25 to raise the interest rate by 50 basis point. We believe March will be the most inflationary month in terms of rate of change.
Thursday will see the release of economic data on retail sales and consumer sentiment. Friday, which is a day off, will see the release of Empire State Manufacturing and Industrial Production data.
The ECB will probably remain silent on Thursday, but it will still express its desire to normalize monetary policy. Christine Lagarde, President of the ECB, might hint at a liftoff occurring in the second part of the year without giving any specifics. Canada and the RBNZ may raise interest rates this week while Turkey remains unchanged.