Time to pick up the pace

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:

DOWNLOAD THE FULL REPORT

Authors: 

Simon Harvey, Head of FX Analysis

María Marcos, FX Market Analyst

Nick Rees, FX Market Analyst

Disclaimer

This information has been prepared by Monex Europe Holdings Limited, part of Monex S.A.P.I. de C.V. (“Monex”). The material is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is, or should be considered to be, financial, investment or other advice on which reliance should be placed. No representation or warranty is given as to the accuracy or completeness of this information. All entities in the “Monex” group of companies are regulated for different products and services within the jurisdictions in which they operate. Details of the different entities can be found here. Details of the respective entities’ regulated status and available products and services can then be found on the relevant links to the individual jurisdictions’ website.