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Mar 19, 2018

FINANCIAL MARKETS AWAIT FEDERAL RESERVE RATE DECISION AND POWELL SPEECH

FED DECIDE ON RATES

The Federal Reserve interest rate decision takes center stage this week, with most economists expecting the FED to hike U.S interest rates by 0.25 basis points at this meeting. Janet Yellen's replacement Jerome Powell also delivers his first policy statement as Chair of the Federal Reserve Bank. Market participants will be paying close attention to new FED Chair Powell's speech, with his wording under the microscope for any overly dovish or hawkish remarks.

We also see further central bank action from the Reserve Bank of New Zealand and the Bank of England, as they deliver key interest rate decisions. The UK and Canadian economies both release key CPI and Retail sales figures this week, whilst the Australian economy releases key employment data and the Meeting Minutes from the RBA's last policy meeting.

Monday 19th March, Eurozone Trade Balance

The Eurozone Trade Balance, released by the Eurostat, is the difference in value between imported and exported goods and services over a certain period. The monthly Trade Balance gives valuable insight into pressures on the value of the Euro currency, whilst exports exceeding imports and a wider trade deficit indicates that more goods were imported than were exported.

  • The EURUSD pair remains bearish whilst trading below the 1.2305 level, further losses towards the 1.2205 and 1.2160 levels appear possible.

  • Should the EURUSD pair move above the 1.2305 level, buyers may test towards the 1.2382 and 1.2430 resistance levels.

Tuesday 20th March, AUS RBA Meeting Minutes

The minutes of the Reserve Bank of Australia meetings are published two weeks after the banks actual interest rate decision. The minutes give a full account of the policy discussion, including differences of view and also record the votes of individual members of the Committee. Generally speaking, if the RBA is hawkish about the inflationary outlook for the economy it is usually seen as bullish for the Australian dollar.

  • The AUDUSD pair remains bearish whilst trading below the 0.7780 level, further declines towards the 0.7715 and 0.7655 level seem possible.

  • Should the AUDUSD pair move back above the 0.7780 level, further upside towards the 0.7880 and 0.8000 levels may occur.

Wednesday 21st March, U.S FED Interest Rate Decision

Federal Open Market Committee members meet eight times per year to decide on monetary policy, and on where to set the U.S interest rate. Rate changes impact interest rates for consumer loans, bonds, mortgages and the US dollar exchange rate. Rising rates tend to cause the US dollar to appreciate while falling rates cause it to depreciate. The decision of the FOMC is usually very important, maybe more important than the actual interest rate move made by the central bank, due to it being greatly anticipated. This statement includes hints for future monetary policy decisions and contains the Federal Reserve's collective view.

  • The USDJPY pair remains bearish whilst trading below the 106.45 level, further losses towards 105.22 and 104.60 seem possible.

  • Should the USDJPY pair trade above the 106.45 level, further advancement towards the 107.22 and 108.10 level remains possible.

Thursday 22nd March, UK BOE Interest Rate Decision

Bank of England policy makers decide on where to set the United Kingdom's interest rate on Thursday, with most economists expecting the BOE to keep rates on-hold at 0.50 percent. Investors pay close attention to how the UK Monetary Policy Committee vote when deciding on whether to hike rates, with MPC members previously voting 9-0 in favor of keeping UK rates unchanged at last month's policy meeting.

  • The GBPUSD pair is bearish whilst trading below the 1.3930 level, further losses towards the 1.3820 and 1.3760 levels remain possible.

  • Should the GBPUSD pair trade above the 1.3930 level, further upside gains towards 1.4000 and 1.4160 seem likely.

Friday 23rd March, CAD Consumer Price Index

The Consumer Price Index, released by the Statistics Canada, measures the change in the price of goods and services from the perspective of the consumer. CPI is the most important indicator of inflation in the Canadian economy, aiding the Reserve Bank of Canada when they decide on where to set interest rates. Large rises in CPI in a short period of time indicates periods of inflation, and large decreases in CPI during a short period of time usually mark periods of deflation.

  • The USDCAD pair remains bullish whilst trading above the 1.2990 level, further upside towards the 1.3160 and 1.3280 levels may occur.

  • Should the USDCAD pair decline below the 1.2990 level, key weekly support is then found at the 1.2920 and 1.2840 levels.

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