All eyes and ears are on the FOMC this week, as the Fed is widely expected to hike interest rates.
Any other catalysts to look out for?
Here’s what you need to know about this week’s top-tier events:
Major Economic Events:
U.S. retail sales (Mar. 16, 12:30 pm GMT) – Uncle Sam will be printing the retail sales report for February, possibly showing a slowdown in consumer spending.
Headline retail sales are projected to print a meager 0.4% uptick versus the earlier 3.8% gain while the core version of the report might indicate a 0.9% gain after January’s 3.3% increase.
However, the dollar’s reaction to this report might be muted since traders are likely holding out for the FOMC decision in a few hours.
FOMC statement (Mar. 16, 6:00 pm GMT) – Time for a Fed liftoff? Many are counting on the U.S. central bank to finally hike interest rates by 0.25% in this month’s decision.On top of that, the Fed is expected to announce a balance sheet reduction and to set a timeline for future tightening moves.
This comes after Powell’s testimony earlier on, confirming that the Fed is about to start withdrawing stimulus, plus a very strong U.S. CPI release for February.
Any major adjustments to the dot plot forecasts of interest rate changes might mean big moves for the Greenback.
New Zealand quarterly GDP (Mar. 16, 9:45 pm GMT) – After printing a 3.7 contraction for Q3 2021, New Zealand might show a strong rebound of 3.2% for the last quarter of the previous year.
Stronger than expected results could keep Kiwi bulls hopeful that the RBNZ can carry on with its tightening moves later this year. Weak data, on the other hand, might hint that the central bank needs to hit the pause button.
Australian jobs report (Mar. 17, 12:30 am GMT) – The Land Down Under has been consistently posting upbeat jobs growth over the past three months, and the momentum was likely sustained until last month.
Analysts are projecting a 40.3K jump in hiring, following the previous 12.9K increase. This could bring the unemployment rate down from 4.2% to 4.1% for February.
BOE monetary policy decision (Mar. 17, 12:00 pm GMT) – Not to be overshadowed by the Fed, the BOE might also announce a 0.25% interest rate hike this week.Pound traders have pared tightening expectations, though, as the war in Ukraine might convince some policymakers to be more cautious.
Still, some expect that the vote to hike for the third month in a row might be a unanimous one since U.K. inflation continues to run high.
BOJ monetary policy decision (Mar. 18) – The BOJ also has a monetary policy decision lined up this week, but this might not spark so much volatility since no changes are eyed.
Japan continues to struggle in its recovery from the pandemic, so BOJ officials would likely keep stimulus in place for much longer. Still, it’s worth noting that inflation is also running high in Japan, so Governor Kuroda might have some remarks on addressing that.
Forex Setup of the Week: USD/CAD
This pair is still in consolidation mode, but the top-tier dollar events this week might spur a breakout. Which way might it go?Price is inching closer to the ascending triangle bottom around the 1.2700 major psychological mark, which might still keep losses in check. After all, the 100 SMA is above the 200 SMA to suggest that support is likely to hold.
Stochastic is still pointing down, though, so sellers might have some energy to take USD/CAD further south. The oscillator has also formed lower highs while price had higher highs, creating a bearish divergence.
A break below the triangle bottom might be followed by a selloff that’s the same height as the triangle or roughly 600 pips. On the flip side, a move past the resistance around 1.2900 could trigger a rally of the same size.
The upcoming FOMC decision could pump up the volatility for this pair around the middle of the week, especially if the Fed has some surprises up its sleeve.