Daily Forex Market Preview, 23/03/2018
Following the Fed meeting, it was the turn of the Bank of England. As widely expected, the central bank held interest rates steady at 0.5%, albeit with two dissenting votes in favor of a rate hike.
The central bank stuck to the base scenario of cementing expectations for a next rate hike in May 2018. The recent slowdown in inflation and pickup in wages alongside the Brexit transitory deal helped policy makers to push the case for a “gradual” rate hike. Still, in the longer term, the Bank of England is expected to stay cautious until the UK formally exits the Eurozone.
The British pound jumped on the news but soon gave up gains.
Monetary policy and economic data were once again overshadowed by U.S. politics. The U.S. President Trump announced that his administration would levy over $50 billion in tariffs on China for intellectual property theft. The markets were jittery on the news as this could potentially breakout into a full-fledged trade war. At the center of the discussion is whether China will respond with similar policies.
U.S. equity markets were weak with a mix of U.S. trade policies and the Facebook investigation into alleged data theft.
Looking ahead, the markets will be looking to a quiet Friday with only retail sales and inflation report from Canada coming up. Headline inflation is forecast to rise 0.4%, slower than 0.7% increase registered previously. Core retail sales are expected to rise 0.9%, reversing some of the declines from the month before.
Data from the U.S. will cover the durable goods orders report which is forecast to rise 0.5% which would reverse the 0.3% decline registered in the previous period. The day concludes with new home sales report that is expected to show a headline print of 621k.
EURUSD 23-03-2018 Intra-day analysis
EURUSD (1.2333): The EURUSD was seen closing on a bearish note yesterday after posting an intraday high of 1.2388. The gains were rejected with price testing the short term trend line. Support is seen around 1.2239 level which is expected to hold in the near term. With the horizontal resistance level at 1.2363, the EURUSD is expected to remain muted below this level for the near term while maintaining the sideways range within 1.2363 and 1.2180 level of support.