Volatility remains in the market as the Fed’s slightly dovish tone last week continues to reverberate in the markets, the forward guidance offered by the Fed continues to point towards a rate-hike before the end of the year but the size of which now dominates the debate.
Last week’s FOMC press conference saw a slightly dovish tone from Janet Yellen, signalling that although rate hikes were a probability this year the extent of the hike might fall short of analysts’ expectations. The Fed aims to reduce but not eliminate the economic growth support it offers. The greenback has lost ground in early week trade.
It is a busy data week in the US, led by Fed vice-chair Stanley Fischer on Monday. Tuesday includes CPI and Manufacturing PMI data. Wednesday has the February Durable Goods Orders; Thursday shows the normal jobs numbers and Friday ends the week with Quarter 4 GDP figures.
The Eurozone heads back into focus this week; Greek Prime Minister Tsipras met with German Chancellor Angela Merkel on Monday to continue talks on the Greek debt issues. The tone was positive with Merkel emphasizing the importance of Greece staying in the Euro and the need for the economy to strengthen and for a sturdy Greek administration to see through its funding terms. It’s a case of damage control by holding the smallest party to account to prevent possible fallout in Spain, Portugal or Italy.
A volatile week for GBPUSD last week, the Pound lost ground in early trade reaching 1.4640 on Wednesday before reversing sharply in the afternoon up to just above 1.50. The pair closed at a loss of just over 1% for the week mainly driven by statements from the US Fed. Trade has been relatively quiet at the start of the week but with plenty of data out and a refocus on Greece, the volatility could well continue. This week closes with an important speech from BOE Governor Mark Carney.
The Aussie has gained strongly on the Greenback in the past week up by over 3% and near a 1-month high. AUDUSD continued to gain ground yesterday on the back of positive Chinese economic sentiment. A quiet data week for the Aussie as its course should follow the international markets.
NZD gained above 3% on USD last week and the pair now sits at the highest point since mid-December. NZD strength continues to push AUDNZD closer to parity with the pair sitting close to 1.0280 at the moment. Trade data out on Tuesday came out marginally below analysts’ expectations; there is no further significant data out of NZ this week.
A busy and volatile week for the Rand following the S&P downgrade last Thursday as well as the Fed speech. USDZAR will take direction from movements on EURUSD for the most part but there is the SARB rates announcement on Thursday, the majority of analysts expect a no-change decision with the CPI sitting inside the mandated target; this is due mainly to the lower oil prices.
Upcoming Economic Data and Events
24 March 2015:
09h00 am GMT: Eurozone/USD manufacturing PMI
09h30 am GMT: GBP Jan Core CPI (YoY) & Feb CPI
12h30 pm GMT: USD CPI Figures
25 March 2015:
12h30 pm GMT: USD Durable Goods Orders
26 March 2015:
17h00 pm GMT: SARB MPC Rate Announcement