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Weekly Focus: Heading for a Trade War?

Market movers ahead

  • In the US, the data calendar is light and we expect focus to remain on Donald Trump’s policy. One game changer may be confirmation of Steven Mnuchin as Treasury Secretary.
  • The main event in the UK next week is the House of Commons vote on the Article 50 bill on Wednesday. The vote is expected to be passed and put the government on course to trigger Article 50 on 9 March as planned.
  • In the euro area, we expect to see a decline the Sentix index after it reached very high levels in January. Likewise, we expect to see a decline in German industrial production after a solid showing in the autumn.
  • Chinese FX reserve data are likely to attract some attention, as we saw big movements in the Chinese currency in January.
  • We expect next week’s inflation figures from both Norway and Denmark to increase. In Denmark, this is due to base effects and rising food prices. In Norway, we do not expect the increase to last, as the effect of the NOK depreciation eases .

Global macro and market themes

  • Data continues to look robust globally and most markets moved sideways.
  • The USD continues to weaken, as Trump’s team blames Germany, Japan and China for currency manipulation.
  • Uncertainty remains high and a trade war could be brewing.
  • We expect the USD to strengthen over coming months as more details on Trump’s fiscal policy plans are revealed.

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Danske Bank
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