Daily Forex Market Preview, 22/03/2018
It was a busy day for the markets with key events lined up that included the UK jobs data, the U.S. Federal Reserve meeting and the RBNZ monetary policy meeting.
Data from the UK showed that the unemployment rate fell to 4.3% on the month beating estimates of an unchanged print of 4.4%. Wage growth surprised to the upside rising 2.8% on the month which beat estimates of 2.6% and accelerating from a revised 2.7% seen previously.
The Federal Reserve hiked the 30-day Fed funds rate to 1.75% as widely expected by the markets. The Fed stuck to its baseline scenario of three rate hikes this year while upgrading its economic assessment. However, the hawkish statement was offset by a dovish press conference chaired by the new Fed Governor Jerome Powell.
The U.S. dollar fell sharply on the day with the biggest gains coming from commodities such as WTI crude oil and gold.
The RBNZ’s meeting was clearly overshadowed by the FOMC meeting. The RBNZ held the overnight cash rate unchanged at 1.75%. The monetary policy statement did not deviate from the previous monetary policy meeting which saw the NZD playing more to the Fed’s narrative than the RBNZ.
Looking ahead, focus turns to the UK as the Bank of England will be holding its monetary policy meeting today. Based on the recent dip in inflation and a pickup in wage growth, expectations ride high for the next BoE rate hike in May. With the recent tides of uncertainty from Brexit abating due to the transitory deal, the Bank of England is expected to push forward with the next rate hike.
The UK retail sales report will be coming up ahead of the BoE meeting. Economists forecast that retail sales increased 0.4% on the month, accelerating from 0.1% previously.
In the Eurozone, flash manufacturing and services PMI data for March will be released.
EURUSD 22-03-2018 Intra-day analysis
EURUSD (1.2362): The euro currency reversed the declines as price was seen pushing higher on the day. The euro gained 0.77% on the day but price action was confined to Wednesday’s range. The bounce in the common currency sent the euro to trade back at the 1.2363 level of resistance which also coincides with a medium term trend line. A reversal at this level is quite likely but overall, the EURUSD is expected to maintain a sideways range within the 1.2363 and 1.2180 levels of resistance and support.