Weekly Outlook, Mar 11-15: Dollar Index & Brexit Vote, Things you Should Know - Forex News by FX Leaders
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Weekly Outlook, Mar 11-15: Dollar Index & Brexit Vote, Things you Should Know

Posted Sunday, March 10, 2019 by
Arslan Butt • 5 min read
  • The US dollar declined against its opponents on Friday as traders absorbed a mixed labor market news revealing a surprising slump in job gains for February.On Tuesday MPs will declare their opinion on Prime Minister Theresa May’s plan to take Britain out of the European Union on 29 March.Bank of Japan Monetary Policy, is there any chance of policy shift? Let’s find out.Dollar Index – Ascending Triangle PlaysThe Greenback weakened for the first time in eight sessions after worse than expected US payrolls news. The general trends in January’s employment report turned in February. That said, growth in Nonfarm payrolls was a slender 20k. The report increased concerns that the world economy was slowing.

    Fundamentally, the coming week is again loaded with a top-tier economic event which has the potential to drive big movements in the dollar. This is why you should focus on technical outlook along with the fundamentals outlook.

    Core Retail Sales m/m – On Monday, the core retail sales will be in focus and released by Census Bureau at 12:30 (GMT). This figure is expected to rise by 0.4% vs. -1.8% during February.

    Retail Sales Likewise, retail sales are also expected to remain neutral with 0% growth. Yet, it will be considered positive as the figures dropped by -1.2%.

    CPI m/m – On Tuesday at 12:30 (GMT), the Bureau of Labor Statistics is scheduled to release US inflation data. Economists aren’t expecting any rise in inflation which is sort of unfavorable situation for the dollar. CPI rose at 0% rate during January, however, any rise in the February figures will support the dollar and vice versa.

    PPI m/m – On Wednesday at 12:30 (GMT), the Bureau of Labor Statistics will release the Producer Price Index (PPI). The figures fell by -0.1% vs. a forecast of 0.1%. Economists haven’t released the current month’s forecast, however, any rise in PPI will extend support to the dollar.

    Core Durable Goods Orders m/m – On Wednesday, the data is due at 12:30 (GMT). For beginners, it’s a change in the total value of new purchase orders placed with manufacturers for durable goods, excluding transportation items. It’s a leading indicator of production – rising purchase orders signal that manufacturers will increase activity as they work to fill the orders. The US Durable Goods Orders rose by 1.2% vs 0.8% previously. Looked like it has to do with the US Partial Government Shutdown which has resumed now. Let’s see how figures play this month.

    Weekly Support & Resistance LevelsSupport Resistance
    97.009 97.697
    96.797 97.909
    96.453 98.253
    Key Trading Level: 97.353

    Key Technical Points
    The dollar index trades above 20 & 50 periods EMA which signifies a bullish sentiment of traders.On the daily timeframe, the dollar is showing a strong sell over fundamentals. But here’s the thing, the upward trendline is likely to support it near $95.89.The RSI & Stochastics are still holding above 50, indicating a strong bullish momentum in the dollar.The bearish engulfing candle can cause a continuation of the selling trend until $96.15. The bearish breakout can lead it towards $95.70Brexit Vote, Things you Should KnowAs we spoke earlier, the UK Parliament is going to hold a Parliament Brexit Vote on Tuesday where MPs will pass their verdict on Prime Minister Theresa May’s plan to take Britain out of the European Union on 29 March.

    What’s the Brexit Deal Vote?
    Long story short, the UK members of Parliament will be passing verdict on the deal Theresa May spent two years negotiating with the European Union.

    Importance of This Vote
    This vote is becoming highly significant as the Brexit deadline of 20 March is approaching.

    If MPs rejects the deal, one of two situations is likely to happen.
    The United Kingdom will leave the European Union on 29 March without a withdrawal agreementAlternatively, the departure date will be delayed.

    What if UK Members of Parliament Reject the Deal?
    The UK MPs are widely expected to reject the deal and let’s say that really happens, then the MPs have been assured a vote on whether the UK should withdraw without a deal or not. This vote will happen on March 13, Wednesday.

    As a last resort, Theresa May can also call for another final vote on EU summit on 22 March, to see if they can delay Brexit to finalize things. I must say it’s a complex scenario and the ifs & buts are causing uncertainty for investors. It’s really hard to say which way the market is gonna move, so I personally will avoid taking positions in the GBP until the voting is done.

  • Dollar Index – Ascending Triangle PlaysThe Greenback weakened for the first time in eight sessions after worse than expected US payrolls news. The general trends in January’s employment report turned in February. That said, growth in Nonfarm payrolls was a slender 20k. The report increased concerns that the world economy was slowing.

    Fundamentally, the coming week is again loaded with a top-tier economic event which has the potential to drive big movements in the dollar. This is why you should focus on technical outlook along with the fundamentals outlook.

    Core Retail Sales m/m – On Monday, the core retail sales will be in focus and released by Census Bureau at 12:30 (GMT). This figure is expected to rise by 0.4% vs. -1.8% during February.

    Retail Sales Likewise, retail sales are also expected to remain neutral with 0% growth. Yet, it will be considered positive as the figures dropped by -1.2%.

    CPI m/m – On Tuesday at 12:30 (GMT), the Bureau of Labor Statistics is scheduled to release US inflation data. Economists aren’t expecting any rise in inflation which is sort of unfavorable situation for the dollar. CPI rose at 0% rate during January, however, any rise in the February figures will support the dollar and vice versa.

    PPI m/m – On Wednesday at 12:30 (GMT), the Bureau of Labor Statistics will release the Producer Price Index (PPI). The figures fell by -0.1% vs. a forecast of 0.1%. Economists haven’t released the current month’s forecast, however, any rise in PPI will extend support to the dollar.

    Core Durable Goods Orders m/m – On Wednesday, the data is due at 12:30 (GMT). For beginners, it’s a change in the total value of new purchase orders placed with manufacturers for durable goods, excluding transportation items. It’s a leading indicator of production – rising purchase orders signal that manufacturers will increase activity as they work to fill the orders. The US Durable Goods Orders rose by 1.2% vs 0.8% previously. Looked like it has to do with the US Partial Government Shutdown which has resumed now. Let’s see how figures play this month.

    Weekly Support & Resistance LevelsSupport Resistance
    97.009 97.697
    96.797 97.909
    96.453 98.253
    Key Trading Level: 97.353

    Key Technical Points
    The dollar index trades above 20 & 50 periods EMA which signifies a bullish sentiment of traders.On the daily timeframe, the dollar is showing a strong sell over fundamentals. But here’s the thing, the upward trendline is likely to support it near $95.89.The RSI & Stochastics are still holding above 50, indicating a strong bullish momentum in the dollar.The bearish engulfing candle can cause a continuation of the selling trend until $96.15. The bearish breakout can lead it towards $95.70Brexit Vote, Things you Should KnowAs we spoke earlier, the UK Parliament is going to hold a Parliament Brexit Vote on Tuesday where MPs will pass their verdict on Prime Minister Theresa May’s plan to take Britain out of the European Union on 29 March.

    What’s the Brexit Deal Vote?
    Long story short, the UK members of Parliament will be passing verdict on the deal Theresa May spent two years negotiating with the European Union.

    Importance of This Vote
    This vote is becoming highly significant as the Brexit deadline of 20 March is approaching.

    If MPs rejects the deal, one of two situations is likely to happen.
    The United Kingdom will leave the European Union on 29 March without a withdrawal agreementAlternatively, the departure date will be delayed.

    What if UK Members of Parliament Reject the Deal?
    The UK MPs are widely expected to reject the deal and let’s say that really happens, then the MPs have been assured a vote on whether the UK should withdraw without a deal or not. This vote will happen on March 13, Wednesday.

    As a last resort, Theresa May can also call for another final vote on EU summit on 22 March, to see if they can delay Brexit to finalize things. I must say it’s a complex scenario and the ifs & buts are causing uncertainty for investors. It’s really hard to say which way the market is gonna move, so I personally will avoid taking positions in the GBP until the voting is done.

  • I’m expecting the market to trade with the same sentiment, in this case, we can see weakness in the Sterling. That’s it for now, stay tuned to FX Leaders for more trade ideas and forex trading signals.
  • Have an awesome week!

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