The Fed is up this week, folks! Are you ready to trade the dollar? I don’t think so! At least not until you read the top potential dollar movers over the next few days.
FOMC statement (Mar 20, 2;00 pm GMT)
One of the biggest events of the week is the Fed’s monetary policy decision for the month of March.
While market geeks expect Governor Powell and his friends to keep their policies steady for another month, all eyes will be on their plans in the foreseeable future (read: this year and next year).
Many believe that the Fed’s “dot plot” will reflect fewer rate hikes projected this year. Specifically, they’re now expecting only one rate hike for 2019 and one to no rate hike in 2020. That’s a step down from the two that the team had penciled in for 2019 last December!
Word around is that Powell will also use this month’s presser to announce the central bank’s plans to stop unwinding its massive balance sheet. After all, the Fed head honcho had already hinted as much in his recent Congressional testimony.
Don’t expect deets, though! It’s more likely that we’ll only hear a rough schedule than hear about the size and the timing of the Fed’s plans.
If Powell does share the Fed’s plans this month, and if a bigger catalyst doesn’t show up later in the week, then it’s likely that FOMC’s announcements will dictate the dollar’s intraweek trends.
Flash manufacturing and services PMIs (Mar 22, 9:45 pm GMT)
While it’s no central bank announcement, traders will likely pay attention to manufacturing and services PMIs to see just how “patient” the Fed has to be before it resumes its aggressive rate hike schedule.
Analysts expect Markit’s manufacturing PMI to improve from 53.0 to 54.0 in March. Meanwhile, the services PMI – which can provide clues on the next NFP report – is expected to inch higher from 56.0 to 56.6.
This week’s releases could also give clues on how strong Uncle Sam is to weather a delay or an escalation of hostilities over the U.S.-China trade negotiations, so make sure you stick around to see how the dollar reacts!
Market risk appetite
We know from last week’s price action that traders can treat the Greenback as a safe haven in times of risk appetite.
This week pay attention to top-tier releases from other major economies like the U.K., EU, Australia, and Canada in case they influence market risk sentiment.
Oh, and stay glued to the tube for any Brexit-related updates! We already know that British policymakers don’t like a no-deal scenario. Over the next couple of days we’ll find out if PM Theresa May can sell her deal to her peers.
Good luck and good trading!
Missed last week’s price action? Read USD’s price recap for March 11 – 15!