To most market-makers’ delight there was in fact a small amount of volatility last week; US ISM Services PMI (lower than expected), Fed Chair Powell testifying (benign) and Non-Farm Payrolls (higher than expected) all colluded to keep the economic scene somewhat mystifying.
One of the big movers was USDJPY which finished the week around two percentage points lower than where it started as rumours resurfaced about a potential hike in Japanese interest rates. If that does indeed happen USDJPY could well trade a great deal lower than 147. The Bank of Japan announces its decision on 19th March and the Fed on 20th. The Reserve Bank of Australia and Bank of England also announce interest rate decisions during the week of 18th. We therefore have a week to position ourselves for what could be an explosive period in the FX market in just over a week’s time.
To this week and first up (Sunday night) is Japan Q4 GDP, expected to post a positive 1.1%. On Tuesday morning, German Y.o.Y inflation figures for February will be released and are expected to move down to 2.5%. The week then focusses mainly on UK and US data. UK unemployment (January) is expected to remain at 3.8%. US Headline and Core inflation (Y.o.Y) for February are both expected to drop to 3.1% and 3.7% respectively.
UK GDP is the main event on Wednesday morning. Sadly, the data may be quite ugly, with January’s print likely to be recessionary and the yearly number at or around zero!
Thursday’s main numbers are US PPI and US Retail Sales. Producer prices for February are expected to rise (M.o.M) by 0.3%. Retail Sales should be positive (0.7%) after January’s fall.
On Friday, the US Michigan Consumer Sentiment Index preliminary estimate for March is expected to print 76.6 vs 76.9 previously.
Good Luck and Good trading!
Ben Robson is Head of Institutional E-FX at Swiss Finance Corporation. He is also the Amazon Best Selling Author of Currency Kings – How Billion traders Made their Fortune Trading Forex. McGraw Hill 2017
