Forecasting the Coming Week: Markets remain focused on inflation

The Dollar ended its second straight week of gains on the back of the broad-based knee-jerk in US yields across the curve, reclaiming the area beyond the 104.00 barrier and maintaining the risk complex under further pressure. The Fed and the BoE delivered dovish holds, while the BoJ came up with a dovish hike (after 17 years).

The USD Index (DXY) extended its constructive bias and surpassed the 104.00 hurdle, leaving behind at the same time the key 200-day SMA. In the upcoming week, the Chicago Fed National Activity Index and New Home Sales are due on March 25. Next on tap are Durable Goods Orders, the FHFA House Price Index, and the always relevant Consumer Confidence tracked by the Conference Board on March 26. On March 28, the final Q4 GDP Growth Rate is due, seconded by Pending Home Sales, Initial Jobless Claims and the final Michigan Consumer Sentiment print. On March 29, the PCE takes centre stage along with Personal Income, Personal Spending and Trade Balance results.

EUR/USD accelerated its decline and challenged the 1.0800 region towards the end of the week amidst the intense buying bias in the Dollar. On March 26, Germany’s GfK Consumer Confidence is due seconded by the final Consumer Confidence, Economic Sentiment, and Industrial Sentiment, all in the broader euro bloc. Germany’s Retail Sales and the labour market report are expected on March 28.

In line with the bearish tone in the broad risk complex, GBP/USD came under further downside pressure and put the 200-day SMA near 1.2590 to the test at the end of the week. In the UK, the final Q4 GDP Growth Rate is due on March 28.

USD/JPY extended its strong upside momentum and maintained the trade above the 151.00 mark on Friday, always amidst the persistent depreciation of the Japanese currency. The BoJ will release its Minutes on March 25 ahead of the Summary of Opinions and Foreign Bond Investment figures on March 28. Finally, Housing Starts, Retail Sales, Industrial Production and the Unemployment Rate are all due on March 29.

AUD/USD kept the pessimism well in place in the second half of the week, revisiting the vicinity of the 0.6500 neighbourhood. The RBA’s Consumer Inflation Expectations are due on March 25, ahead of Westpac’s Consumer Confidence Index on March 26. On March 27, Westpac’s Leading Index and the Monthly CPI Indicator will come ahead of Housing Credit and Retail Sales on March 28.

Anticipating Economic Perspectives: Voices on the Horizon

• Fed’s Cook and Bostic speak on March 25 along with BoE’s Mann.
• RBA’s Connolly is due to speak on March 26
• FOMC Waller and BoJ Tamura speak on March 27.
• Chief Powell speaks on March 29.