The week of 18th-22nd March 2024- The week it is all meant to happen! But will it?

Let’s go back a few months and re-cap on what was being touted. If I remember correctly, I heard that the Fed is going to start an interest rate easing cycle in March and the ECB is going to cut interest rates 6 times this year! Oh, yes, and the Bank of Japan will scrap negative interest rates after 8 years. So, will something happen? This week we will see. But it won’t be from the Fed.

By Ben Robson

The Bank of Japan and The Reserve Bank of Australia announce interest rate decisions on 19^th March and the Fed on 20th. The Bank of England also announces its interest rate decision on 21^st. The current state of play is, BOJ (negative 0.1%) RBA 4.35%, Fed 5.25-5.5% and BOE 5.25 %.

Recent central Bank meetings have been about curbing inflation. And a certain resoluteness that inflation needs to be in check before cutting interest rates. Both US headline inflation and PPI last week did not help the interest rate easing narrative. US headline inflation rose to 3.2% Y.o.Y. for February, Core was slightly lower at 3.8% (down from 3.9%), US producer prices increased by 0.6% in February.

There’s been a lot of talk that Japan will raise rates very soon. There’s some excitement that it could be on Tuesday! However, more than 80% of economists are plumping for April. I would expect the Fed, RBA and BOE to keep their current level of interest rates unchanged! I think Japan will stay at negative 0.1% too. Why? Japan inflation numbers will be released this week and the Japanese Tankan at the end of the month. The data will help with April’s policy decision.

This week will also reveal inflation figures for the Eurozone (Monday- expect north of 3% Y.o.Y Feb), Canada (Tuesday, expect around 3% for Headline and 2.5% for Core Y.o.Y Feb), the UK (Wednesday- expect 4% for Headline and 5% for Core Y.o.Y. Feb). Japan’s figure is out late on Thursday night; the last print was 2.2%.

Other metrics worth paying attention to are New Zealand Q4 GDP (Wednesday evening- expected 0%) and Australian employment figures (Thursday morning- expect unemployment to fall to 4%).

Good Luck and Good trading!

By Ben Robson

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