The US Federal Reserve interest rate decision and projections will be the focal points.
Private sector PMIs for March also need consideration as global macroeconomic indicators send mixed signals.
The BoE, BoJ, and RBA monetary policy decisions will also warrant investor attention.
On Tuesday, US housing sector data will draw investor interest. Economists consider the housing sector a litmus test of the US economy. A slump in building permits and housing starts may influence bets on an H1 2024 Fed rate cut.
However, the Fed interest rate decision, press conference, and economic projections will have more impact on Wednesday. The markets expect the Fed to leave rates at 5.5% in March. A hold would turn the focus to the economic projections and press conference. The outlook on inflation, the economy, and interest rates will move the dial.
On Monday, finalized inflation numbers for the Eurozone will set the tone for the EUR/USD. Downward revisions to preliminary numbers could support bets on a June ECB rate cut. Eurozone trade data also needs consideration amidst the threat of a Eurozone recession.
Q4 wage data for the Eurozone will warrant investor attention on Tuesday. Wage growth remains a bugbear for the ECB. A pickup in wage growth could influence the ECB rate path. Other stats include German consumer sentiment numbers. However, these will likely play second fiddle to the wage growth numbers.
On Thursday, preliminary private sector PMIs for France, Germany, and the Eurozone will be in focus. The services sector PMIs will have more impact, with services being the main contributor to inflation.
The German economy will be in focus again on Friday. German Ifo Business Climate numbers wrap up an important week.
On Wednesday, UK inflation numbers for February will influence buyer demand for the Pound. Sticky inflation figures could signal a higher-for-longer Bank of England rate path.
Preliminary private sector PMIs for the UK will kickstart an important Thursday session. The focus will be on the Services PMI, accounting for over 70% of the UK economy.
Beyond the headline PMI, investors must consider employment, new orders, and prices. An upward trend in wages and output prices could influence the BoE rate path.
The Bank of England will likely play for time in Thursday’s rate announcement as it awaits greater clarity on wage growth, which remains stronger than in the U.S. or the eurozone. The BoE is expected to start cutting borrowing costs from 5.25% – the highest since 2008 – in August, a Reuters poll showed, potentially bringing up the rear, behind both the Fed and the European Central Bank.
On Friday, UK retail sales numbers for February will end a busy week. Upward trends in consumer spending could fuel demand-driven inflation and delay the timeline for a BoE rate cut.
Away from the economic data, Bank of England commentary also needs monitoring.
Crude oil markets sizzled last week with international crude oil futures hitting a record five month high-mark to $85 per barrel after the International Energy Agency (IEA) raised its demand forecast for 2024, predicting a tighter market. Ukraine’s drone attack on Russia’s oil refinery also supported the uptrend on prices as the ongoing conflict posed fresh supply disruptions.
Oil gained three per cent last week with the benchmark Brent crude settled near the $83 per barrel mark, after rising 4.3 per cent over the previous two sessions and reaching the highest level since November on Thursday. Also, US West Texas Intermediate (WTI) crude was down 17 cents or 0.21 per cent to $81.09.
Have your trading charts ready this week!
This Week’s High Impact Events
The times below are GMT +2.
Monday 18th March
No High Impact Events
Tuesday 19th March
Tentative – Japan – Monetary Policy Statement
Potential instruments to Trade: JPY Crosses.
05.30 – Australia – Cash Rate, RBA Rate Statement
Potential instruments to Trade: AUD Crosses.
06.30 – Australia – RBA Press Conference
Potential instruments to Trade: AUD Crosses.
Tentative – Japan – BoJ Press Conference
Potential instruments to Trade: JPY Crosses.
14.30 – Canada – CPI m/m
Potential instruments to Trade: CAD Crosses.
Wednesday 20th March
09.00 – UK – CPI y/y
Potential instruments to Trade: GBP Crosses.
20.00 – US – Federal Funds Rate, FOMC Economic Projections, FOMC Statement
Potential instruments to Trade: USD Crosses.
20.30 – US – FOMC Press Conference
Potential instruments to Trade: USD Crosses.
23.45 – New Zealand – GDP q/q
Potential instruments to Trade: NZD Crosses.
Thursday 21st March
02.30 – Australia – Employment Change, Unemployment Rate
Potential instruments to Trade: AUD Crosses.
From 10.15 – Europe – Flash Manufacturing & Flash Services PMI
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