Forecasting the Coming Week: ECB meets Non-farm Payrolls… and Powell
The Greenback ended the week on a slight bearish note, as investors continued to price in a potential interest rate cut by the Fed in June, while unexpected weakness in key fundamentals also put the currency under pressure, allowing instead some breathing room in the risk-associated universe.
Data-driven selling pressure dragged the USD Index (DXY) back to the 103.80 region on Friday, prompting the index to end its second consecutive week in negative territory. Next week, the focus of attention will be on Non-farm Payrolls and the Unemployment Rate on March 8. Before those events, the final S&P Global Services PMI, the ISM Services PMI, and Factory Orders are due on March 5. Moving forward, the ADP report, Wholesale Inventories, and Fed Beige Book are expected on March 6, seconded by the usual Initial Jobless Claims and Balance of Trade figures on March 7.
On the domestic calendar, the final HCOB Services PMI is due in Germany and the euro area on March 5. On March 6, Germany’s Trade Balance will be on tap, followed by the ECB meeting and press conference by President Lagarde on March 7. Furthermore, another revision of the EMU Q4 GDP Growth Rate is expected at the end of the week. EUR/USD regained composure in the latter part of the week and looked to consolidate the breakout of the 1.0800 hurdle.
In the UK, the BRC Retail Sales Monitor and the final S&P Global Services PMI are scheduled for March 5. Next on tap will be the S&P Global Construction PMI and the release of the Spring Budget 2024 on March 6. GBP/USD rebounded markedly and reclaimed the area around 1.2650 at the end of the week on the back of renewed weakness in the Greenback.
USD/JPY traded in an erratic performance and closed its first week with losses following four advances in a row. Data-wise, in Japan, Q4 Capital Spending is due on March 4, ahead of weekly Foreign Bond Investment figures on March 7. The busy session on March 8 will see Household Spending, Bank Lending, the flash Coincident Index, the Leading Economic Index, and the Eco Watchers Survey.
In Oz, Building Permits and the final Judo Bank Services PMI are due on March 4, prior to the Ai Group Industry Index. On March 6, the Q4 GDP Growth Rate takes centre stage ahead of the Balance of Trade results, Home Loans, and Investment Lending for Homes, all due on March 7. It was a negative week for AUD/USD despite the bounce in the latter part of the week, ending a three-week positive streak.
In Canada, the Ivey PMI and the interest rate decision by the Bank of Canada (BoC) are due on March 6. In addition, Balance of Trade prints and Building Permits are expected on March 7, seconded by the labour market report on March 8. The USD/CAD closed its third consecutive week of gains, although the upside still appears limited by the 1.3600 barrier.
In China, the Caixin Services PMI comes on March 5 seconded by the Balance of Trade readings on March 7. Finally, the Inflation Rate and Producer Prices are expected on March 9. USD/CNH extended its range-bound theme above the 7.2000 region.
Anticipating Economic Perspectives: Voices on the Horizon
- BoJ’s K. Ueda speaks on March 5 along with Fed’s M. Barr.
- Fed’s J. Powell testifies and M. Daly speaks on March 6.
- Fed’s J. Powell testifies on March 7.
- On February 29 will speak, Fed's R. Bostic, A. Goolsbee and L. Mester.
- Fed's J. Williams is also due on March 8.
Central Banks: Upcoming Meetings to Shape Monetary Policies
- The Malaysian central bank (BNM) meets on March 7 and is expected to leave its policy rate unchanged at 3.00%.
- No surprises are expected at the ECB event on March 7.