Focus will be on the reactions to yesterday’s referendum in which the people ofCrimea voted overwhelmingly in favour of joining Russia. The result was expected,as around 60% of the population on Crimea are ethnic Russians. Both the US and theEU have made it clear that they do not recognise the referendum and have warned thatan inclusion of Crimea into Russia will be met with sanctions. Information aboutpossible sanctions could come as early as today, as European Foreign Ministers willbe meeting on the subject. More harsh trading sanctions could be decided upon at theend of the week by the European heads of state and governments at the EU summit.
On the data front we will get the final euro CPI for February, which we expect to berevised down to 0.7% y/y from 0.8% in the flash estimate. This will put a bit morepressure on the ECB.
In the US the Empire index and industrial production will give more insight into themanufacturing cycle. Manufacturing production took a big hit in January followingbad weather and we expect to see only a slight rebound in February. Inventories arehigh in the US following four months of very weak consumption and this is likely tokeep production subdued.
The US NAHB housing index is expected to rebound slightly after last month’s bigdrop. However, keep an eye on the sales expectations, which have also been weaklately. Since the index is forward looking (six months ahead) it should not be affectedby the weather.
The rest of the week focus will be on Wednesday’s FOMC meeting. We expect theFed to taper USD10bn but focus will be on projections and Yellen’s first pressconference following a Fed meeting.
Read the full report: FX Daily
Danske Bank