Weekly Forecast – March 6
Below are the events expected in the following week, and our take on currency movements:
Only a very weak US employment report would be likely to disrupt expectations of a Federal Reserve rate hike in March. The latest ECB meeting will also be an important focus with attention likely to be slightly more on Europe during the week.
As far as economic data is concerned, the main focus will be on the US employment report due on Friday. The data will always trigger some short-term volatility across all asset classes and the release will be particularly important this month as it will be pivotal in determining whether the Federal Reserve pushes ahead with an interest rate increase at the March meeting. Only a very weak report would be likely to disrupt Fed plans to raise rates.
In contrast to the previous week, there will be no commentary from Fed officials. The FOMC members have entered a blackout period ahead of the March 15th statement and will not be making any public comments on matters relating to the economy or monetary policy.
Rhetoric from the US Administration and President Trump will continue to be monitored closely during the week with a particular focus on currency matters ahead of the G20 meeting the following week.
The UK trade and manufacturing data will be released on Friday, although political developments will tend to be more important during the week.
The government will release its annual budget on Wednesday which will have a significant impact on sentiment even though the main fiscal policy statement will switch to Autumn from late 2017 so there will be two budgets this year.
Developments surrounding the Brexit Bill in parliament will also be watched closely during the week.
The ECB will announce its latest policy decision on Thursday with no real possibility that there will be a change in interest rates. It is also highly likely that the bond-purchase programme will be left unchanged.
The press conference from bank President Draghi will be an important focus with the tone on inflation and growth trends important for Euro sentiment.
Developments surrounding the French Presidential election will also be important with all candidates under intense scrutiny.
The Reserve Bank of Australia will announce its latest interest rate decision on Tuesday with rates expected to be left on hold at 1.50%.
Canada will release its latest employment data on Friday, although there is unlikely to be a major impact on monetary policy.
The Chinese trade data due on Wednesday will be an important influence on global risk sentiment. There is a risk that the data will be distorted by seasonal considerations, but markets are expecting strong annual growth in exports and imports which would help support confidence.
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