News & Analysis

The week just gone saw another period of muted dollar price action play out. Peak to trough, the trading range for the DXY index was just 0.6%. Consequently, the focus for FX markets lay outside the US this week, with significant data releases out of Japan, Canada and the Eurozone a major focus. In Japan, inflation data was at the centre of attention. CPI readings continued to ease, but less than expected. This keeps the BoJ on track to abandon yield curve control in April, provided Shunto negotiations indicate that inflation has been successfully embedded in wages. In Canada GDP data was the highlight of the week. Whilst a strong headline print initially saw the loonie rally, soft details in the report soon saw this move reversed. Eurozone inflation was the final big event of the week. That said, it largely proved underwhelming for FX markets. A small beat to the upside still leaves price growth on track to undershoot ECB forecasts, leaving the data broadly net-neutral for markets.

Next week activity should ramp up again for FX traders, with the focus set to fall on Switzerland first. If February’s CPI data shows benign domestic inflation pressures similar to January, then a 25bp cut from the SNB on March 21st will be viewed as a foregone conclusion by markets. Key central banks meetings for both the BoC and ECB should steal the limelight next week though, with the odds of April rate cuts set to face scrutiny, before a new round of jobs data out of North America is published on Friday. In addition, traders will also receive a fresh budget decision from the UK government, where we expect few giveaways, while developments in Mexico and Poland will be key for the high yielding currencies. All told, this should add up to a busy week for FX markets, a welcome relief after a period of relative quiet.

You can read the Week Ahead in full here:




Simon Harvey, Head of FX Analysis

María Marcos, FX Market Analyst

Nick Rees, FX Market Analyst


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