US stocks markets will be under the spotlight as the benchmark S&P 500 experienced its first week of losses after five straight positive weeks and yet more record highs. Earnings season also continues with Nvidia, the current market darling, reporting after the US close on Wednesday. The stock overtook Alphabet and Amazon recently to become the third most valuable company on Wall Street. The chipmaker has soared 48% so far this year after more than tripling in 2023 as demand for artificial intelligence drives huge orders for the company’s advanced semiconductors. Forward guidance and outlook for the rest of the year will be critically important for both the stock and wider indices. Options markets project at least a double digit move in the price on the back of the earnings announcement.

The greenback completed a fifth consecutive week of gains, though the dollar index again closed near its lows. The major theme for markets continues to be the scaling back of expectations of rate cuts, especially in the US which has boosted Treasury yields and the buck. Markets have gone from pricing in over 175bps of policy easing starting in March at the start of the year to currently around 100bps, kicking off in June.

The calendar is relatively thin Stateside this week with the FOMC minutes likely to be rather dated in light of the recent ongoing strength in the labour market and inflation data. However, it should be noted that expectations for price pressures are well in line with targets and banking activity point to the restrictive stance of policy having a dampening effect on the economy going forward. Support in the dollar Index sit around 103.86, with prices still above the 200-day simple moving average at 103.69.

Markets do get to see the latest PMI business survey which are released on Thursday. These are important forward looking economic indicators that are forecast to show renewed strengthening in global manufacturing, following on from several solid report out of Asian countries that normally lead in the cycle. However, PMIs could also signal ongoing softness in services, which at least in the euro area seem to be stagnating, albeit with rising prices. EUR/USD dropped to three-month lows last week below 1.07 though the major found buyers around this level. Regaining 1.08+ would give the euro a little more bullish momentum.

In Brief: major data releases of the week

20 February 2024, Tuesday

– Canada CPI: Consensus expects the headline to tick one-tenth lower to 3.3% y/y and 0.4% m/m. Traditional core is estimated at 0.5% m/m. The Bank of Canada is concerned about persistent inflation and sees a mixed picture on underlying price pressures. That means it is in no rush to change rates in either direction.

21 February 2024, Wednesday

-FOMC Minutes: The focus will be on any guidance around policy rates after Chair Powell ruled out a March cut. That said, strong data including jobs and CPI since the meeting may mean the minutes are stale. Balance sheet discussions could also be in the spotlight.

22 February 2024, Thursday

–Eurozone PMIs: Expectations are for manufacturing to increase to 47.1 from 46.6 and services to rise to 48.7 from 48.4. The composite is seen ticking up to 48.5 from 47.9. The outlook appears less gloomy, but still in contraction territory.

–UK PMIs: Services PMI is forecast to remain at 54.3 and manufacturing to increase to 47.5 from 47.0. This points to modest, positive growth in the first quarter. The first BoE rate cut has now been pushed back to August.

23 February 2024, Friday

–IFO German Business Survey: Morale brightened last month as Europe’s biggest economy kicked off the new year with easing inflation and an improved outlook. The first quarter could see GDP shrink further, but the economy should narrowly avoid recession.