March 19 – 23: Economic Events Outlook – FED Rate Decision Looming
Arslan Butt • 3 min read
Welcome back to another exciting week. We are expecting a volatile loaded week complete with monetary policy decisions from BOE, RBNZ, RBA and investor’s favorite FED. Brace yourself for a rollercoaster ride this week…
Economic Data Watch List
The Greenback suffered a lot due to uncertainty surrounding Trump’s decision to slap tariffs on aluminum and steel. Things worsened after the NFP report failed to impress the market, especially with regard to wage growth.
The dollar index extended its losses after the firing of Secretary of State Rex Tillerson. The dollar is likely to remain supported on the rate hike sentiments.
Monday – March 19
G20 Meetings – This meeting is attended by finance ministers and central bankers from 20 industrialized nations, including the G7 nations. These nations are due to meet on Monday to discuss a range of global economic issues including regulation of cryptocurrencies, in Buenos Aires.
Crypto traders are encouraged to monitor the meeting as this can cause nice fluctuations in the Crypto market.
Tuesday – March 20
AUD – Monetary Policy Meeting Minutes
At 1:30 (GMT), the Reserve Bank of Australia is expected to release its monetary policy minutes. If you recall, the RBA shared its concerns over the rate of wage growth surrounding rising debt levels in its March statement. However, RBA Lowe failed to share anything new.
If the RBA does the same in their meeting minutes, we are likely to see a muted impact in the Australian currency pairs. Investors will be focusing on other catalysts to predict the direction of Aussie pairs.
GBP – CPI y/y
The Office for National Statistics will release inflation data at 10:30 (GMT). The Inflation has been stuck near 3% for the past five months. The BOE inflation target is 1 – 3% and the current inflation rate is holding right at the upper limit of this range.
In this particular scenario, the Central bankers go for a hawkish policy such as hiking the interest rate and lowering the money supply in the market.
The BOE is due to release the interest rate later this week. Can we expect the same kind of behavior from Carny? We will talk about it in the next section.
Wednesday – March 21
USD – FED Monetary Policy Decision
Federal Funds Rate – At 19:00 (GMT), the Federal Reserve is expected to hike the interest rate by 25 base points from 1.50% to 1.75%. Honestly, the rate hike isn’t going to be surprising, as the dollar has already priced in the 1.75% rate.
We will have a great opportunity to trade if the Fed surprises the market by keeping the rate on hold at 1.50%. A quick sell in dollar and buying in Gold will make us good money. But, the chances of a 1.50% rate are minimal.
FOMC Press Conference – Federal Reserve Chair Jerome Powell will be conducting a press conference at 19:30. New Fed Chair Jerome Powell will most probably hike the interest rate in his first decision.
However, the point to focus on is the dot-plot. Back in December, the Fed chair Janet Yellen continued emphasizing three hikes in 2018.
In Powell’s first speech, he hinted that things have improved since then. The inflation figures are stable and closer to the target.
The dollar is likely to skyrocket if the Fed members shift the dot-plot to four rate hikes in 2018 as opposed to the three which are already priced in.
NZD- RBNZ Monetary Policy Decision
Official Cash Rate – The RBNZ is due to release the cash rate at 21:00 (GMT). The RBNZ is expected to keep the rate on hold at 1.75%. Since the decision is coming out after the Fed rate decision, we may see a muted reaction upon the release of the news.
Thursday – March 22
GBP – BOE Monetary Policy Decision
Back in February, the Bank of England kept their hawkish tone by saying that rates will rise faster and earlier than expected, causing bullish trends in the Sterling.
Official Bank Rate – The rate decision is due at 13:00 (GMT) and the BOE is expected to keep the rate unchanged at 0.50%. The Sterling may exhibit bearish movement on the news. The BOE is expected come up with the next rate hike in May 2018.
MPC Official Bank Rate Votes – The voting could move the market if released with a change. Presently, the voting is forecasted as 0-0-9. This means that all the members are expected to keep the rate on hold. In this case, if any member shows leanings towards a rate hike (perhaps due to better than expected inflation data), we will see another round of bullish waves in the Pound.
Friday – March 23
CAD – CPI m/m
The Statistics Canada will release the figures at 13:30 (GMT). The Canadian inflation is forecasted to drop to 0.4% vs. 0.7% previously. The Canadian economic events aren’t performing well since their rate hike in September 2017. In addition, the NAFTA issue is still weighing on the commodity currency.
Summing Up – On the back of Fed rate hike forecast, investors are likely to trade the market with a strong dollar sentiment while keeping the commodities under a selling bias. That’s pretty much it for now. Check out FX Leaders News Trading Strategy and stay tuned for exciting forex trading signals. Good luck!