Forex Market Outlook for the Week March 15 – 19, 2021

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In the upcoming week, the central banks in the US and the UK are set to decide their monetary policies. On the economic data front, the key announcements that the traders will focus on are retail sales data from the US, inflation figures from Canada; employment change in Australia, and fourth-quarter GDP growth rate from New Zealand. Having said that here is an outlook on a few important announcements from around the world:

#1: Australia RBA Governor Philip Lowe Speaks (03/14/2021 Sunday 23:15 GMT)

Philip Lowe, Governor of the Reserve Bank of Australia, is scheduled to speak at a virtual conference organized by the Melbourne Business School. Markets often turn volatile during his speeches as traders make an attempt to understand the direction of interest rates. If the tone of his speech is more hawkish than expected, it is good for the Australian dollar.

#2: United States Core Retail Sales (03/16/2021 Tuesday 12:30 GMT)

In the United States, retail trade excluding autos jumped 5.9 percent, registering the strongest increase ever since June, on a month-over-month basis in January after the reading for the prior month was revised upward to a decline of 1.8 percent. The reading for January came in well above analysts’ expectations for a 1.0 percent increase.

Forecast for February 2021: 0.2 percent

#3: United States Retail Sales (03/16/2021 Tuesday 12:30 GMT)

forex market outlookIn the United States, retail sales rose by 5.3 percent on a month-over-month in January after the figure for December last year was revised upward to a decline of 1.0 percent. The reading for January, the strongest gain ever since June last year, beat analysts’ expectations for a 1.1 percent gain in retail sales. New stimulus measures implemented by the government led to increased consumer spending. Sales increased the most at electronics and appliance stores; nonstore retailers; furniture stores; sporting goods, musical instruments, and hobby items retail outlets; and food and drinking places.

Forecast for February 2021: -0.5 percent

#4: Canada CPI (03/17/2021 Wednesday 12:30 GMT)

In Canada, the consumer prices increased 0.60 percent in January over the prior month.

Forecast for February 2021: 0.7 percent

#5: United States FOMC Economic Projections (03/17/2021 Wednesday 18:00 GMT)

The Federal Reserve releases the Economic Projections Report four times every year. The report provides the FOMC’s projection for economic growth and inflation over the next two years. More importantly, it provides a breakdown of individual FOMC member’s views on interest rate forecasts. The Fed uses the report as a tool for communicating with investors as regards the nation’s economic and monetary projections. If the tone of the report is more hawkish than expected, it is good for the greenback.

#6: United States FOMC Statement (03/17/2021 Wednesday 18:00 GMT)

The FOMC releases the Rate Statement eight times every year. At every release, the FOMC makes slight changes to the statement. Traders focus on these changes. The FOMC uses the statement to communicate with investors as regards the monetary policy. In addition to containing the outcome of the members’ vote on setting interest rates and other policy measures, it offers commentary on the economic conditions that impacted their votes. More importantly, the statement projects the nation’s economic outlook and offers clues votes. If the tone of the FOMC Statement is more hawkish than expected, it is good for the greenback.

#7: United States FOMC Press Conference (03/17/2021 Wednesday 18:30 GMT)

The Federal Reserve Chair holds a press conference after the announcement of the interest rate. The press conference lasts for about an hour and has two parts. In the first part, he reads out a prepared statement. In the second, he answers questions posed by the press representatives. As the questions can lead to unscripted answers, heavy market volatility can be expected.

#8: New Zealand GDP (03/17/2021 Wednesday 21:45 GMT)

New Zealand’s GDP rebounded 14.0 percent on a year-on-year basis in the September quarter of last year after the reading for the prior period was revised downward to a decline of 11.0 percent. Analysts had expected the GDP growth rate to come in at 14.1 percent. New Zealand’s economy grew for the first time in three quarters and registered the largest quarterly increase on record. The economy continued to recover from the impact of the COVID-19 outbreak. The services sector registered a sharp growth of 11.1 percent after plunging 9.8 percent in the second quarter of last year, driven by the transport; postal and warehousing; retail trade and accommodation; and wholesale trade. The goods-producing industries grew 26.0 percent after the 15.9 percent decline in the prior period. Manufacturing and construction rebounded 17.2 percent and 52.4 percent, respectively. On a quarter-on-quarter basis, New Zealand’s GDP rebounded 0.4 percent following the 12.4 percent fall in the prior period.

Forecast for the fourth quarter of 2020: 0.1 percent

#9: Australia Employment Change (03/18/2021 Thursday 00:30 GMT)

In Australia, employment rose by 29,100 in January from December last year. The reading for the month came in well below analysts’ expectations for a 40,000 gain. The reduction in hiring numbers was attributed to the peak holiday season during the first two weeks of January. While full-time employment rose by 59,000, part-time employment fell by 29,800.

Forecast for February 2021: 31,500

#10: Australia Unemployment Rate (03/18/2021 Thursday 00:30 GMT)

On a seasonally adjusted basis, Australia’s unemployment rate dropped to 6.4 percent in January from 6.6 percent in December last year. Analysts had expected the jobless rate to come in at 6.5 percent. January’s reading is the lowest unemployment rate ever since April last year as the economy started coming out of the COVID-19 shock gradually. The number of unemployed people in the country fell by 34,300 to 877,600 as those looking for full-time employment dropped by 40,300 to 618,400 and those wanting only part-time employment decreased by 5,900 to 259,200. The participation rate came in at 66.1 percent compared to analysts’ expectations and December 2020’s 16-month high level of 66.2 percent. While the underemployment rate declined 0.4 points to 8.1 percent, the underutilization rate shed 0.6 points to 14.5 percent.

Forecast for February 2021: 6.3 percent

#11: United Kingdom BoE MPC Votes and Official Bank Rate (03/18/2021 Thursday 12:00 GMT)

In the meeting held in February, the Monetary Policy Committee members of the Bank of England voted unanimously (0-0-9) to maintain the benchmark interest rate at the record low level of 0.1 percent. Policymakers also decided to leave the volume of the bond-buying program unchanged at the current level. Further, they noted that the time is appropriate to start preparations for setting the rate in the negative rate in about 6 months. However, they stressed that their statement should not be considered as a signal. Additionally, the central bank said that the rollout of the coronavirus vaccine in several countries around the world, including the United Kingdom, has immensely contributed to improving the economic outlook. However, the central bank voiced concerns as regards the recent increase in the number of cases because of the newly identified mutated strains of the virus and the imposition of restrictions to contain the spread of infections.

Forecast for March 2021: 0-0-9 and 0.10 percent

#12: United Kingdom BoE Monetary Policy Summary (03/18/2021 Thursday 12:00 GMT)

The Bank of England releases the Monetary Policy Summary Report on a monthly basis. The central bank uses it as its primary tool for communicating with investors as regards the monetary policy. In addition to containing the outcome of the members’ vote on setting interest rates, it also provides information with respect to decisions taken on other policy measures. In addition, it offers commentary on the economic conditions that impacted their votes. More importantly, it gives a projection of the nation’s economic outlook and provides clues on future votes.

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