The U.S. Dollar is trading in familiar ranges ahead of a heavy week for central bank meetings and announcements.
Overview
The Federal Reserve will have theirs on Wednesday when traders will eagerly await any signs within Chairman Jerome Powell’s statements that indicate the Fed is indeed willing to make an interest rate cut sometime soon this year. There is a chance that the Fed will start telegraphing a desire to reduce rates to stay ahead of any economic pain to come from an economy that may be slowing down. While many indicators look fine, any suggestion that there are signs of trouble to come should hurt the Buck.
All eyes will also be focused on the Bank of Japan as the meeting on Tuesday serves as another moment that could establish if, indeed, officials are determined to lift their benchmark interest rate away from negative territory. Overnight in the Asian trading session, the Nikkei 225 equity index rose by the most in over a month. Much of the jump in risk-taking across Japan’s markets has been due to the historically weak Yen. Any hawkish action from BOJ would be welcome, and any lifting of rates would be the first since 2007.
What to Watch Today…
- BOJ & RBA Meetings Tuesday
- FOMC Presser on Wednesday
- BOE & SNB on Thursday
- Banxico on Thursday
- Monex USA Online is always open.
EUR ⇑
The Euro remains on the positive thus far through March, having gained half a percent in value after some swings that took away its swagger. Data revealed this morning progress towards an annual inflationary average of 2.0% while the monthly pace of price growth climbed 0.6% per February figures. Purchasing Managers Index readings for March will be out on Thursday.
More importantly, Putin’s heated words after the weekend’s attacks are cause for concern. The Russian leader warned that the West is coming close to escalating the Ukraine fight into a global conflict. Nuclear war has even entered the dangerous rhetoric. Geopolitical risks will heavily affect markets. The attacks on refineries aided the rise of oil prices to their highest in four months.
MXN ⇑
The Mexican Peso is the best-performing major currency thus far into March, with a 1.5% appreciation since the month began. We will get word from Banxico, the central bank, on Thursday to see if indeed they are ready to make interest rate cuts. At 11.25%, some officials have already indicated they see room to cut. However, much like in the U.S., economic data has not shown the weakness necessary to convince central bankers that pain is ahead and they need to get in front of it by alleviating the financial costs of borrowing. Expect lots of volatility as retail sales and inflation gauges also play into the turbulence this week.
