The Top 5 events/releases for next week's currency trading
For the week starting March 14 and ending on March 18th
The clocks change here in the US with the spring forward change. What it means is we will be 4 hours from London time...I think.
- FOMC interest rate decision. Wednesday, March 16 at 2 PM ET. The Fed is expected to keep rates unchanged, but do not be surprised if there are more bearish undertones in the statement. Commodities and stocks have stabilized. Employment remains healthy. Lower gas prices are putting more money in most Americans pockets (the negative is the jobs lost in the industry). Global concerns have eased...somewhat. The dollar is even off now, thanks to the ECB and RBNZ easings this week (sarcasm). Remember, these bullet points are all snapshots at a particular point in time but may give the Fed an opportunity to fit a statement with "their dots". The Fed in their dot plot the last time, has projected that they will tighten 4 times in 2016. The market is certainly not thinking that, nor may the Fed - especially with no change. However, they may want to fire a shot across the bow to remind the market that the number they are thinking is not one. Granted, the market takes the dot plot with a grain of salt by now. Members tend to have the courage of 1000 matadors with time on their side to the end of the year for instance, but as time ticks by (we are into March), the prospects of 4 is a bit unrealistic. It would shock me if they went to 2 but 3 is most likely (even if it is still likely too high). More will be written about the meeting next week by the FXL staff so be on the lookout.
- Bank of Japan Monetary Policy Statement. Tentative on Monday. Time variable. The Bank of Japan is expected to do nothing but pressure remains for some action at some point. The problem is negative interest rates are not sitting well with savers. The BOJ wants spenders but it is hard to change savers into spenders. So policy actions are like pushing on a string. Meanwhile, the Nikkei is down 11.01% and that certainly is not helping things economically nor inflation expectations. More QE? Or fiscal policy? What the Japan/the world needs now is the US businesses to start making big capex expenditures (US Consumer is doing it's part) and lift the global demand for goods, but they are too afraid, and the US is in the midst of a change in power and with that lots of uncertainty.
- BOE Rate Decision. Thursday 8 AM ET. The BOE is expected to keep rates unchanged but the market will work through the statement. At the last meeting the consensus was unanimous for no change. The expectations are for the vote to remain the same.
- US Retail sales for February. Tuesday at 8:30 AM ET. The January numbers showed that Ex auto and Gas rose by 0.4% and the Control group gained by 0.6%. So the Q1 was off to a great start. For February, the headline number is expected to decline by -0.1% but the Ex Auto and Gas AND the Control group are both expected to rise by 0.2%. It may not influence the FOMC decision for Wednesday but for a data dependent Fed (or with some more data dependent than others), it may be something that influences their bias for the future (PS. what the Fed might like more is stronger Capex though).
- Australia Employment Change. Wednesday in NY/Thursday in Australia at 7:30 PM ET (subject to change due to the US time change). The employment change for February is expected to come in at +12K after a -7.5K decline in January. In December there was a -900 decline as well. Sure that is a slowing but remember in October and November employment surged by 53.9K and 78.5K respectively. The unemployment rate is expected to remain unchanged at 6.0%. It did move up from the 5.8% lows reached in November and December (was the low going back to April 2014). Employment has held up despite the huge mining industry contraction due to China.
Other events of interest:
- SNB Rate decision. Thursday at 4:30 AM ET. Will the SNB react to the ECB easing or will they do their talking in the forex market directly.
- UK employment on Wednesday
- UK annual budget release (how many minutes will the speech be this year).
- US CPI (Wednesday)
- NZD GDP (Wednesday)