FX market this week: Central Bank monetary policy meetings (FOMC and BOE) among top-tier data/events to keep forex traders busy.
Central bank meetings are likely to be the big focus point for the forex traders in this week (March 18-22) along with other top-tier macro data points across the globe. On top of these, the latest developments of Brexit are likely to keep investors busy.
Central bank meetings: FOMC, BOE, SNB and Norges Bank.
Except for Norges Bank all the central banks are likely to keep its policy path reasonably unchanged.
Overall, this week is expected full of action with the G10 currencies, few of them namely AUD, CAD, CHF, EUR, GBP, USD, and NZD.
Review: Last week the dollar surrendered against the G10 counterparts with the US, 10Yr Yields closed at 2.59, the lowest level since January 03, 2019.
The following are the top-tier data releases and events that will keep forex traders busy:
- AUD: RBA Monetary Policy meeting minutes (Tue) and February Labour Force data (Thu)
- CAD: Inflation number month-on-month (Fri)
- CHF: SNB Monetary Policy Assessment (Thu) followed by a Press Conference
- EUR: German ZEW Economic Sentiment (Tue) and EZ PMIs (Fri)
- GBP: CPI Yoy (Wed) and BOE Monetary Policy summary (Thu)
- USD: FOMC meeting followed by a press conference (Wed)
- NZD: Current account (Tue) and GDP (Wed)
Central Bank Meetings preview: Global economic growth has slowed, and downside risks to growth have increased in the past few months. In a recent communication, major central banks have changed the tone. Back in January 2019, the Fed changed the tone to dovish followed by ECB. Now the market is expecting a rate cut from RBA.
Here is a gist of what analysts anticipate from central bank meetings.
FOMC: Market participants focus on the Fed’s dots lot. We expect another hike will take place in either September 2019 or in December 2019. In case of continued dovish bias could open the G10 currencies to squeeze especially AUD, EUR, and NZD.
Westpac said, “The FOMC’s March meeting will not only provide an updated qualitative assessment of the outlook, but also the first set of revised quantitative economic forecasts since the Committee’s collective dovish turn at the start of this year.”
Norges Bank: The market is waiting for the second rate hike, which we expect to happen this week by 25bps. In December 2018 meeting, Governor Øystein Olsen said: “Our current assessment of the outlook and the balance of risks suggest that the policy rate will most likely be raised in March 2019.”
Danske bank: we expect Norges Bank to raise its policy rate by 25bp to 1.00% and signal one further rate hike this year.
Morgan Stanley said, “We expect Norges Bank to hike by 25bp and keep its policy path relatively unchanged as strong domestic data offset the weaker external environment.”
BOE: The BOE will keep on hold until clouds over Brexit cleared.
Westpac said “Since the BOE’s last update, economic activity has remained middling. Importantly, there’s been no real progress on Brexit negotiations. Parliament intends to seek an extension to the negotiation period, but for businesses, this means the continuation of the economic uncertainty that has been a significant drag on investment plans. Against this backdrop, there’s no chance of a change in the Bank Rate this month, and the BOE will emphasize the conditionality of its forecasts.”
SNB: We expect the Swiss National Bank set to keep the interest on hold at -0.75%.
Chart of the week: AUDCHF
As long as 0.7040 is supporting (double bottom) , watch out for 0.7260, note that 200MAs spread between 0.7165-0.7180.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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