The US dollar, Japanese yen, and British pound are all likely to experience choppy price action this week in light of rate decisions from the Federal Reserve and Bank of Japan, along with the release of the minutes from the Bank of England’s last meeting. Meanwhile, the euro will see the release of the German ZEW survey and the Canadian dollar will encounter highly market-moving retail sales figures.
[B]• German ZEW Survey (MAR) - March 17[/B]
The release of the German ZEW survey of investor sentiment for the month of March is anticipated to reflect increasing pessimism on both current conditions and the economic outlook. Indeed, the index of sentiment on the current situation is forecasted to fall to a more than 5-year low of -90.0 from -86.2 while the outlook is projected to slip down to -8.0 from -5.8. This report can be market-moving for the euro on a very short-term basis upon release at 6:00 ET, with disappointing results likely to weigh on the currency. On the other hand, better-than-expected data could provide a bit of a boost for the euro.
[B]• Bank of Japan Rate Decision, Monthly Report - March 18[/B]
The Bank of Japan is expected to announce late on March 17 that they have left their target rate unchanged at 0.10 percent, but the release of the Bank’s monthly report at 01:00 ET on March 18 should provide more information on their view of economic conditions. Over the past few months, the BOJ’s report has reflected consistently worse economic assessments, and this may continue to be the case as the higher value of the Japanese yen takes a toll on the country’s export industry. Meanwhile, in light of the Swiss National Bank’s announcement of currency intervention on March 12, there is mounting speculation that the BOJ will announce or hint at similar measures, which would likely drive the Japanese yen lower. On the other hand, if the BOJ doesn’t even mention currencies, the Japanese yen could see a bit of a boost.
[B]• Bank of England Meeting Minutes - March 18[/B]
The Bank of England’s meeting minutes tend to be a huge market-mover for the British pound upon release at 5:30 ET, and this time is unlikely to be any different. During the March meeting, the BOE’s Monetary Policy Committee (MPC) slashed the Bank Rate by 50 basis points to yet another record low of 0.50 percent, as expected. The British pound subsequently fell, but this was due primarily to the MPC’s statement which indicated that the BOE would pursue quantitative easing. As far as the minutes go, it will be important to get a sense of the MPC’s outlook because if it is more bearish than previously perceived or if some members indicated that they were open to cutting rates to zero, the news could weigh heavily on the British pound. On the other hand, comments indicating that some MPC members wanted to leave rates at 1.00 percent or signs that 0.50 percent marks a floor for the Bank Rate could lead the currency higher.
[B]• Federal Open Market Committee (FOMC) Rate Decision - March 18[/B]
The Federal Open Market Committee (FOMC) is widely expected to leave the fed funds target range at 0.0 percent - 0.25 percent, and this should remain the case throughout much of the year. In fact, the FOMC said on January 28 that they continue “to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.” Furthermore, the last statement said that the Committee’s policy focus is now “to support the functioning of financial markets and stimulate the economy through open market operations and other measures that are likely to keep the size of the Federal Reserve’s balance sheet at a high level.” As long as we see these sorts of statements continue to be published, the news shouldn’t be too market-moving. However, the statement could have an impact on risk trends if any sort of fresh initiatives are announced or if the Fed’s sentiment turns more bearish. Ultimately, any news that is positive for the stock markets may be negative for the greenback (which has been trading solely as a safe-haven asset lately), and vice versa.
[B]• Canadian Retail Sales (JAN)- March 20[/B]
The release of Canadian retail sales could prove to be disappointing, as spending is anticipated to have fallen during January. This would mark the fourth straight contraction, and with unemployment rates rising and business activity slowing, continued declines in retail sales are almost sure to come. If the indicator falls in line with or more than expectations, the Canadian dollar could pull back further, especially since the Bank of Canada suggested on March 3 that they may be open to making monetary policy more accommodative even after slashing interest rates to a record low of 0.50 percent. However, if retail sales actually rise, the Canadian dollar could surge in response.
[I][B]See the [/B][/I] [I][B]DailyFX Calendar[/B][B] for a full list, timetable, and consensus forecasts for upcoming economic indicators.
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