Gear up for an eventful week in the financial world! From pivotal CPI releases in Europe to interest rate decisions by major central banks like the Bank of Japan, Federal Reserve, and Bank of England. Keep an eye on key assets such as EUR/USD, USD/JPY, and GBP pairs, as well as indices like DAX30 and commodities like Gold.
Stay tuned as we delve into the implications of these announcements and uncover potential trading strategies!
🇪🇺 CPI and Core CPI m/m on Monday, March 18, at 12:00 GMT+2
European CPI (Consumer Price Index) measures the changes in the price level of a basket of goods and services purchased by households across European countries. It provides insight into inflationary pressures within the Eurozone, which is essential for policymakers to make informed decisions regarding monetary policy.
The recent release indeed triggered volatility in assets such as EUR/USD and the DAX30 index. In February 2024, the European Union's annual inflation stood at 2.8%, a slight dip from January's 3.1%, contrasting notably with the 9.9% rate recorded a year earlier.
These figures stirred reactions across financial markets. The EUR/USD pair hovered around 1.0900, with short-term prospects pointing towards a downward risk. Meanwhile, Germany's flagship index, the DAX ($GER30), traded near 17,932 points, bracing for potential volatility ahead.
🇯🇵 BoJ Interest Rate Decision on Tuesday, March 19, at 4:30 GMT+2
Earlier today, an increasing number of Bank of Japan policymakers were reportedly considering discontinuing negative interest rates this month.
However, the timing of this potential shift remained uncertain, with no consensus among the nine-member board regarding implementation at the March 18-19 meeting or a delay until the subsequent meeting on April 25-26.
Following the recent development, the Bank of Japan officially ended its negative interest rate policy at its March meeting. It marked the first interest rate hike in 17 years, raising the benchmark rate from -0.1% to a range of 0% to 0.1%. Consequently, the USD/JPY pair maintained its bullish momentum after surpassing 150.00, with a 'sell the fact' reaction to the decision.
🇺🇸 Fed Interest Rate Decision on Wednesday, March 20, at 20:00 GMT+2
Currently, the Federal Reserve's rate stands at 5.5%, with the market eagerly awaiting signs of a potential cut. However, the Federal Open Market Committee (FOMC) is widely anticipated to maintain its key fed funds rate at a 22-year-high, ranging from 5.25% to 5.50%, during Wednesday's meeting. Fed officials aim to gather more evidence from inflation data, ensuring it returns to the targeted 2% before considering any rate cuts. Consequently, the prolonged high-rate environment in the US could bolster the US Dollar, posing a challenge for the EUR/USD pair.
🇬🇧 BoE Interest Rate Decision on Thursday, March 21, at 14:00 GMT+2
The Bank of England is set to make a decision this week on whether to maintain or raise its key interest rate. BOE policymakers will consider fresh inflation data and purchasing managers surveys on Thursday to inform their decision-making process. It is widely expected that interest rates will remain unchanged once again, with the central bank showing no urgency to ease monetary policy. There may even be another three-way split in voting, with some members advocating for a rate cut while others push for a hike.
As a reminder, the current Interest Rate in the UK stands at 5.25%.
However, a decision to lower rates could be made at any time due to receding inflationary pressures. Britain’s Consumer Price Index (CPI) is experiencing a notable decline, with the year-on-year headline print for February estimated at 3.5%, down from 4% the previous month. According to Bloomberg’s economists, food, core goods, and services prices are expected to be the primary contributors to this downward pressure. It's anticipated that headline inflation will likely dip below 3% in March, and inflation expectations have dropped to their lowest levels since the summer of 2021.
🇨🇦 Retail Sales m/m on Friday, March 22, at 14:30 GMT+2
The concluding significant economic release of the week is the Canadian Retail Sales report. Economists anticipate that this time the data will remain unchanged following a 0.9% increase last month. According to forecasts, this could impact the USD/CAD currency pair, which is trading higher, nearing 1.3540. If you have this asset in your trading portfolio, it's advisable to monitor the release closely.
That's it for this week! 👋
