Forex Market Outlook For The Week March 18 – 22, 2019

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Last week, the Brexit drama hit new highs, and the economic data released in the U.S. triggered a lot of action. In the upcoming week, the focus will be on the Fed’s interest rate decision. There are also other events from around the world. Here is an outlook on some of the key releases:

#1: Australia Monetary Policy Meeting Minutes (03/19/2019 Tuesday 00:30 GMT)

The Reserve Bank of Australia releases the Monetary Policy Meeting Minutes two weeks after the announcement of the Cash Rate. It provides a detailed account of the most recent meeting of the Reserve Bank Board and in-depth information as regards the economic conditions that impacted the Board members’ decision on setting interest rates.

#2: U.K. Average Earnings Index (03/19/2019 Tuesday 09:30 GMT)

In the U.K., the total earnings of workers, including bonuses, rose by 3.4 percent annually in the final quarter of last year. Workers’ earnings grew at the same pace in the prior period as well but and missed analysts’ expectations for a 3.5 percent increase. This is the fastest increase in earnings ever since the three-month period to July 2008. Earnings growth rose in finance and business services and construction sectors, while it remained steady in the public and private sectors. However, wage growth was less in services; wholesaling, retailing, hotels, and restaurants; and manufacturing sectors. Excluding bonuses, workers’ earnings rose by 3.4 percent after the reading for the previous period was revised upward to 3.4 percent increased. This was as expected by the analysts. In real terms, workers’ earnings including bonuses rose by 1.3 percent, while those excluding bonuses increased 1.2 percent.

#3: U.K Parliament Brexit Vote (03/19/2019 Tuesday)

forex market outlookThe British Parliament will vote for deciding the passage of the deal with the European Union that triggers Article 50. The result is likely to be projected on the basis of early vote counts ahead of the announcement of the official vote count. To pass the bill, it is essential to have a simple majority.

#4: U.K. CPI (03/20/2019 Wednesday 09:30 GMT)

In the U.K., the annual inflation rate dropped to 1.8 percent in the month of January from 2.1 percent in the prior month. The reading for January came in below analysts’ expectations of 1.9 percent. This is the lowest rate ever since January 2017 and was driven by a slowdown in gas, electricity, and other fuel prices. Forecast for February 2019: 1.8 percent

#5: U.S. FOMC Economic Projections (03/20/2019 Wednesday 18:00 GMT)

The U.S. Federal Reserve releases the economic projections report four times a year. It includes the FOMC’s projection with respect to economic growth and inflation over the next two years. More importantly, it includes a breakdown of interest rate forecasts from individual FOMC members. The Fed uses the report as a tool to communicate with investors.

#6: U.S. FOMC Statement (03/20/2019 Wednesday 18:00 GMT)

The FOMC often changes the Statement a little bit at each release. Traders focus on these changes. The FOMC uses it as a tool to communicate with investors as regards the monetary policy. It provides the outcome of the members’ vote on setting interest rates and any other policy measures. It also provides a commentary on the economic conditions that impacted their votes. More importantly, it includes an analysis of the economic outlook and provides clues on future outcomes.

#7: U.S. Federal Funds Rate (03/20/2019 Wednesday 18:00 GMT)

In the U.S., economic activity is expanding at a strong pace, though it is slightly lower compared to that seen last year. Further, the job market is also expected to be strong. The decline in energy prices in recent times might push inflation below the FOMC’s goal of 2.0 percent. This is what Fed Chair Jerome Powell said in the Semiannual Monetary Policy Report submitted to the Congress. He also added that some conflicting signals and crosscurrents were seen during the last few months.

Financial markets have become more volatile and conditions are less supportive of growth. Further, growth has slowed down in some major economies such as China and Europe. Uncertainty is higher around a number of unresolved government policy measures such as Brexit and trade negotiations.

In the meeting in January, the Fed held the funds rate target range at 2.25 to 2.50 percent. In addition, the Fed pledged patience on interest rate hikes and opened the door to bring about an early end to the balance-sheet reduction program. As it is, the Fed is likely to leave the interest rates unchanged for now. Forecast for March 2019: 1.25 to 2.50 percent

#8: U.S. FOMC Press Conference (03/20/2019 Wednesday 18:30 GMT)

The Federal Reserve Chair Jerome Powell holds a press conference 30 minutes after the announcement of the interest rate. It lasts for about an hour and has two parts: the reading of a prepared statement and answering questions by the press. As the questions frequently lead to answers that are not scripted, heavy market volatility can be expected.

#9: New Zealand GDP (03/20/2019 Wednesday 21:45 GMT)

New Zealand’s gross domestic product expanded 0.30 percent in the September quarter of last year over the prior quarter. Forecast for the final quarter of 2018: growth of 06 percent is on the cards

#10: Australia Employment Change and Unemployment Rate (03/21/2019 Thursday 00:30 GMT)

Australia added 39,100 jobs in January and beat analysts’ expectations for a gain of 15,000. The job addition figure for December was revised downward to 16,900. On a seasonally adjusted basis, the unemployment rate came in at 5.0 percent in January, unchanged from the reading for the prior month. The reading for the month was in line with analysts’ expectations. In February, Australia is expected to hire 15,200 workers. In addition, the unemployment rate is expected to come in at 5.0 percent

#11: Switzerland SNB Monetary Policy Assessment (03/21/2019 Thursday 08:30 GMT)

Released on a quarterly basis, it is the primary tool that the Governing Board of the Swiss National Bank uses for communicating with investors as regards monetary policy. It provides the outcome of the members’ decision on setting interest rates. In addition, it provides a commentary on the economic conditions that impacted their decision. More importantly, it provides a projection of the economic outlook and clues on future outcomes.

#12: Switzerland SNB Press Conference (03/21/2019 Thursday 09:00 GMT)

The Swiss National Bank holds a press conference twice every year after the announcement of interest rate. The press conference lasts for about an hour and has two parts: the reading of a prepared statement and answering questions by the press. As the questions frequently lead to answers that are not scripted, market volatility can be expected.

#13: U.K. Retail Sales (03/21/2019 Thursday 09:30 GMT)

In the U.K., retail trade rose 1.0 percent in January, reversing the downwardly revised drop of 0.7 percent in the prior month. The reading for the month beat analysts’ expectations for a 0.2 percent increase. Retail trade was driven by sales at food stores and was followed by non-store retailing as well as non-food stores. On the other hand, fuel sales declined. Forecast for February 2019: a 0.4 percent decline in retail trade is on the cards

#14: Euro Area European Union Economic Summit (03/21/2019 Thursday)

European state heads are scheduled to meet and vote on Brexit to decide whether the request of the United Kingdom for Article 50 extension. The meeting will be held in Brussels.

#15: U.K. MPC Official Bank Rate Votes (03/21/2019 Thursday 12:00 GMT)

In the meeting held in February, the Monetary Policy Committee members voted unanimously 0-0-9 to maintain the Bank Rate at the 0.75 percent level. The committee also voted to maintain the stock of UK government bond and corporate bond purchases. Forecast for March 2019: 0-0-9

#16: U.K. Monetary Policy Summary (03/21/2019 Thursday 12:00 GMT)

Released on a monthly basis, it is one of the key tools that the Bank of England’s Monetary Policy Committee members uses to communicate with investors as regards the monetary policy. It provides the outcome of the members’ vote on interest rates and various policy measures. It also provides a commentary on the economic conditions that impacted their votes. More importantly, it provides an economic outlook and clues on future votes.

#17: U.K. Official Bank Rate (03/21/2019 Thursday 12:00 GMT)

In the meeting held in February, the Bank of England decided to hold the Bank Rate at the current level of 0.75 and noted that there will be less number of hikes in borrowing costs in 2019. This is because the U.K.’s economy is facing the weakest growth in 10 years amid concerns about a global slowdown and Brexit. The central bank lowered the economic growth forecast to 1.2 percent from 1.7 percent and said that inflation will decline slightly below the 2.0 percent target due to a sharp decline in petrol prices.

#18: France Flash Services PMI (03/22/2019 Friday 08:15 GMT)

In France, the IHS Markit Services PMI rose to the 50.2 level in February from the 47.8 level in the prior month. It was also higher than the preliminary reading and analysts’ expectations of 49.8. The services sector started expanding after contracting for two consecutive months. Forecast for March 2019: 51.4

#19: Germany Flash Manufacturing PMI (03/22/2019 Friday 08:30 GMT)

In Germany, the IHS Markit Manufacturing PMI came in at 47.6 in February, down from 49.7 in January. The reading pointed to the second consecutive month of contraction in manufacturing activities and the steepest decline since December 2012. Forecast for March 2019: 48.0

#20: German Flash Services PMI (03/22/2019 Friday 08:30 GMT)

In Germany, the IHS Markit Services PMI was revised upward to 55.3 in February from the preliminary reading of 55.1. The reading came in at 53 in January. It pointed towards strong growth in the services sector in five months. The growth was driven by expansions in post and telecommunications; renting and business activities; hotels and restaurants; and financial intermediation. Forecast for March 2019: 54.8

#21: Canada CPI (03/22/2019 Friday 12:30 GMT)

In Canada, the inflation rate increased by 0.10 percent in the month of January from the previous month.

#22: Canada Core Retail Sales (03/22/2019 Friday 12:30 GMT)

In Canada, retail trade, excluding autos, declined 0.5 percent on a month-on-month basis in December after the reading for the prior month was revised upward to 0.7 percent. Analysts had expected the core retail trade to decline by 0.3 percent.

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