Stronger US inflation data provided a boost to the Dollar and US yields, reinforcing expectations of a potential rate cut by the Fed at its June meeting. Meanwhile, both EUR/USD and GBP/USD retreated from recent highs, while the Japanese yen garnered attention ahead of the possibility of a policy shift by the BoJ in the upcoming week.
The USD Index (DXY) confidently surpassed the 103.00 mark, fueled by growing speculation of a potential interest rate cut in June and the increasing probability of only two rate reductions for the current year. Looking ahead to the upcoming week, the NAHB Housing Market Index is scheduled for March 18, followed by Building Permits and Housing Starts on March 19. The Fed’s meeting on March 20, along with Chair J. Powell’s press conference, will be closely monitored. Additionally, Initial Jobless Claims, the Philly Fed Manufacturing Index, Existing Home Sales, the CB Leading Index, and flash S&P Global Manufacturing and Services PMIs are all slated for March 21.
EUR/USD regained momentum after hitting fresh weekly lows near 1.0870, reversing three consecutive weeks of gains. On March 18, the final Inflation Rate for the broader Euroland will be released, followed by the Balance of Trade figures. Economic Sentiment from the ZEW for both Germany and the euro bloc is anticipated on March 19, preceding the flash Consumer Sentiment in the euro area on March 20. March 21 will see the release of advanced Manufacturing and Services PMIs in Germany and the broader euro region, alongside Germany’s Business Climate tracked by the IFO institute.
Persistent risk-off sentiment weighed on the British pound, pushing GBP/USD to new multi-day lows near 1.2520 on Friday, resulting in significant losses for the week. In the UK, the Inflation Rate is expected on March 20, followed by Public Sector Net Borrowing, flash Manufacturing and Services PMIs, and the BoE interest rate decision, all on March 21. Retail Sales and Gfk Consumer Confidence will wrap up the week on March 22.
USD/JPY continued its ascent for the fourth consecutive session on Friday, surpassing the 149.00 barrier after starting the week with lows in the mid-146.00s. Machinery Orders are scheduled for March 18, followed by the BoJ meeting and Industrial Production on March 19. Additionally, the Reuters Tankan Index, Balance of Trade figures, and advanced Jibun Bank Manufacturing and Services PMIs are due on March 21. The week will conclude with readings on the Inflation Rate and Foreign Bond Investment.
AUD/USD tested the crucial 200-day SMA around 0.6560 on Friday, extending losses from Thursday and furthering the downward trend for the week. On March 18, the RBA’s Consumer Inflation Expectations will be released ahead of the RBA meeting on March 19. The Q4 GDP Growth Rate and flash Judo Bank Manufacturing and Services PMIs are scheduled for March 20, followed by the Australian labour market report on March 21, preceding the Balance of Trade results.
In China, Fixed Asset Investment, Retail Sales, Industrial Production, and the Unemployment Rate are all slated for March 18. USD/CNH concluded the week on a positive note, breaching the 7.2000 barrier.
Anticipating Economic Perspectives: Voices on the Horizon
- On March 20, ECB President Christine Lagarde is scheduled to speak, alongside Bundesbank President Jens Nagel.
- The following day, on March 21, Bank of Canada’s Timothy Gravelle and FOMC’s Mary Barr will deliver speeches.
- On March 22, Jens Nagel of the Bundesbank, Mary Barr of the FOMC, and Raphael Bostic of the Atlanta Fed are set to address audiences.
Central Banks: Upcoming Meetings to Shape Monetary Policies
- On March 19, both the Reserve Bank of Australia (RBA) and the Bank of Japan (BoJ) are scheduled to hold their meetings.
- The People’s Bank of China (PBoC), Bank Indonesia (BI), and the Federal Reserve (Fed) will host their events on March 20.
- Lastly, the Bank of England (BoE) and the Norges Bank will convene on March 21.
