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Geopolitics, trade to guide markets

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Geopolitics and trade talks are likely to hold investors' attention this week.

Of particular interest will be the next round of trade talks between the US and China, which will see US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin leading a trade delegation to Beijing on Thursday for two-day negotiations with the Chinese side.

The talks come at a time of growing concern with economic weakness in the US, though the Federal Reserve's dovish stance on interest rate hikes should lessen pressure on American companies and the economy.

Brexit also remains a concern to investors in Asia. The EU last Friday approved a reset of the Brexit timetable, with the UK parliament likely to vote on a course of action this week.

Compounding the concern with Brexit, the pound has been volatile for the past two weeks.

DBS FX strategist Philip Wee said in a report: "Until a favourable solution is found, GBP/USD has no incentive to break above its 1.30-1.34 range established since mid-February." He sees the GBP/USD pair falling below 1.30 this year.

The Singapore stock market may start the day lower, getting its cue from a disappointing session on Wall Street.

The New York Stock Exchange saw a sell-off last Friday, amid growing evidence of a global growth slowdown. As a result, the three key indices saw the gains made earlier in the week wiped out.

The Dow Jones Industrial Average fell 460.19 points or 1.77 per cent to 25,502.32, the S&P 500 lost 54.17 points or 1.9 per cent to 2,800.71, while the Nasdaq Composite dropped 196.29 points or 2.5 per cent to 7,642.67.

In Singapore, a slew of economic data for last month has been lined up for release this week.

Consumer price index (CPI) figures are due to be released today, followed by industrial production numbers tomorrow.

Bank lending and monetary aggregates are scheduled to be released on Friday.

On the CPI figures for February, Mr Jameel Ahmad, FXTM's global head of currency strategy and market research, said that they "should help investors gain a clearer picture on the Monetary Authority of Singapore's (MAS') monetary policy outlook, ahead of the central bank's meeting in April".

Bearing in mind that central banks in the US and Europe are adopting dovish stances amid a low inflation outlook, Mr Ahmad added that such conditions "would likely offer the MAS some reprieve from policy moves, having already tightened twice in 2018".

Elsewhere in Asia, few economic data releases are on the cards this week.

But Friday will see a clutch of economic data from Japan for last month, including the jobless rate, industrial production, housing starts and construction orders.

Among central banks in the Asia-Pacific, there is just the Reserve Bank of New Zealand's monetary policy decision on Wednesday. It is expected to keep rates unchanged, with UOB saying in its weekly outlook that the central bank is expected to hold rates "at least until early 2020".

In Europe, the final Q4 2018 gross domestic product figures are due tomorrow in France and Thursday in the UK.

Meanwhile, preliminary March CPI data for Germany is due on Wednesday and for the eurozone on Thursday.

In the US, January's balance of trade data will be released on Wednesday, while the final Q4 GDP data is scheduled for Thursday.

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