Weekly Forex Forecast: 16th to 20th March

The Euro weakened considerably last week as the ECB started its bond purchase program; with a fundamentally stronger Greenback there was no floor to contain the drop in the Euro as the single currency shed -3.23% and was the weakest among the major currencies.

The British Sterling was also weaker as the markets took the dovish comments from BoE Governor Mark Carney to sell off the currency. The Pound fell dramatically across the board, and the Cable was back below 1.48 levels.

Fundamentals for the Week 16 – 20 March

Date	Time	Currency	Event	Forecast	Previous
16-Mar	0:00	AUD	RBA Assist Gov Debelle Speaks
	02:01	GBP	Rightmove HPI m/m		2.10%
	02:30	AUD	New Motor Vehicle Sales m/m		-1.50%
	10:15	CHF	PPI m/m	0.40%	-0.60%
		CHF	Retail Sales y/y	2.60%	2.20%
	14:30	CAD	Foreign Securities Purchases	3.74B	-13.55B
		USD	Empire State Manufacturing Index	8.1	7.8
	15:15	USD	Capacity Utilization Rate	79.50%	79.40%
		USD	Industrial Production m/m	0.30%	0.20%
	15:30	GBP	CB Leading Index m/m		0.10%
	16:00	USD	NAHB Housing Market Index	57	55
	20:45	EUR	ECB President Draghi Speaks
	22:00	USD	TIC Long-Term Purchases	27.2B	35.4B
17-Mar	02:30	AUD	Monetary Policy Meeting Minutes
	17th-24th	CNY	Foreign Direct Investment ytd/y		29.40%
	Tentative	JPY	Monetary Policy Statement
	Tentative	JPY	BOJ Press Conference
	12:00	EUR	German ZEW Economic Sentiment	58.9	53
		EUR	Final CPI y/y	-0.30%	-0.30%
		EUR	ZEW Economic Sentiment	58.2	52.7
		EUR	Employment Change q/q	0.10%	0.20%
		EUR	Final Core CPI y/y	0.60%	0.60%
	14:30	CAD	Manufacturing Sales m/m	-1.10%	1.70%
		USD	Building Permits	1.07M	1.06M
		USD	Housing Starts	1.05M	1.07M
	Tentative	NZD	GDT Price Index		1.10%
	23:45	NZD	Current Account	-3.12B	-5.01B
18-Mar	01:30	AUD	MI Leading Index m/m		0.10%
	01:50	JPY	Trade Balance	-1.21T	-0.41T
	07:00	JPY	BOJ Monthly Report
	11:00	EUR	Italian Trade Balance	4.32B	5.76B
	11:30	GBP	Average Earnings Index 3m/y	2.20%	2.10%
		GBP	Claimant Count Change	-31.0K	-38.6K
		GBP	MPC Official Bank Rate Votes	0-0-9	0-0-9
		GBP	MPC Asset Purchase Facility Votes	0-0-9	0-0-9
		GBP	Unemployment Rate	5.60%	5.70%
	12:00	CHF	ZEW Economic Expectations		-73
		EUR	Trade Balance	21.1B	23.3B
	Tentative	EUR	German 10-y Bond Auction		0.37|1.4
	14:30	CAD	Wholesale Sales m/m	2.10%	2.50%
		GBP	Annual Budget Release
	16:30	USD	Crude Oil Inventories		4.5M
	20:00	USD	FOMC Economic Projections
		USD	FOMC Statement
		USD	Federal Funds Rate	<0.25%	<0.25%
	20:30	USD	FOMC Press Conference
	23:45	NZD	GDP q/q	0.80%	1.00%
19-Mar	02:30	AUD	RBA Bulletin
	06:30	JPY	All Industries Activity m/m	1.70%	-0.30%
	08:45	CHF	SECO Economic Forecasts
	09:00	CHF	Trade Balance	2.87B	3.43B
	10:30	CHF	Libor Rate	-0.75%	-0.75%
		CHF	SNB Monetary Policy Assessment
		CHF	SNB Press Conference
	11:00	EUR	ECB Economic Bulletin
	12:15	EUR	Targeted LTRO		129.8B
	Day 1	EUR	EU Economic Summit
	14:30	USD	Unemployment Claims	297K	289K
		USD	Current Account	-103B	-100B
	16:00	USD	Philly Fed Manufacturing Index	7.3	5.2
		USD	CB Leading Index m/m	0.30%	0.20%
	16:30	USD	Natural Gas Storage		-198B
	23:45	NZD	Visitor Arrivals m/m		0.80%
20-Mar	01:50	JPY	Monetary Policy Meeting Minutes
	04:00	NZD	Credit Card Spending y/y		6.20%
	04:10	AUD	RBA Gov Stevens Speaks
	09:00	EUR	German PPI m/m	0.20%	-0.60%
	11:00	EUR	Current Account	21.3B	17.8B
	11:30	GBP	Public Sector Net Borrowing	7.7B	-9.4B
	14:30	CAD	Core CPI m/m	0.50%	0.20%
		CAD	Core Retail Sales m/m	0.10%	-2.30%
		CAD	CPI m/m	0.70%	-0.20%
		CAD	Retail Sales m/m	-0.30%	-2.00%
	16:20	USD	FOMC Member Lockhart Speaks

 

Currencies/Events to Watch this Week

BoJ Monetary Policy: With most of the Central Banks either cutting rates or standing by with a dovish forward guidance, the markets will tune into the Bank of Japan’s monetary policy meeting on Tuesday. Expectations are high that the BoJ could keep policy unchanged in order to give itself room for a possible expansion to its easing at a later stage. An unchanged policy could see the Yen continue to strengthen across the board, with the exception of the USDJPY.

FOMC Statement: Will the Fed urge market participants to remain “patient” or will it finally remove the word from its statement? Will the policy makers make any comments on the rising strength of the US Dollar, which is starting to take its toll on domestic data as well as affecting the country’s GDP output as well? This week’s FOMC is likely going to be one of the first events that could see markets get wild as expectations ride high for an impending rate hike.

SNB Time again: The Swiss National Bank meets, after close to a quarter from its previous shock. Although nothing significant is expected, there are whispers that the SNB could cut the interest rates even further into negative territory apart from rumors of the SNB possibly looking at a new peg to the Euro, which was categorically dismissed by SNB officials.

Euro short squeeze? With the rapid declines last week, will the Euro get a breather this week? It would entirely depend on the outcome of the FOMC meeting and how the markets react to the news. In the past few meetings, the FOMC’s statement has been hawkish seeing the Dollar continue to rally only to weaken a bit on the FOMC’s meeting minutes, if this trend continues, the Euro could fall sharply further. Although there are a few economic releases from Eurozone, it is likely that the Euro could simply ignore the data and instead rely purely on the strength or weakness of the US Dollar.