Things to watch out for next week:
The dollar fell sharply on Friday after the US jobs report. The DXY erased all gains that followed hawkish comments from Federal Reserve Chairman Jerome Powell. The US economy added more jobs than expected in February (311,000 vs. 205,000) and confirmed the impressive numbers for January. However, the Unemployment Rate rose to 4.6% and wage growth slowed. Prior to the NFP, expectations for a 50 basis point rate hike at the next FOMC meeting were high and then receded, putting downward pressure on US yields. Treasury yields also rose amid risk aversion. The VIX (fear index) rose on Friday to 27.42, a level not seen since late October. US stock indices added losses on Friday, closing the week down more than 4%.
Next week will be quiet as far as the Fed is concerned, as the FOMC goes into lock-in. It will be time for rumors and speculations ahead of the meeting on March 21 and 22. Analysts differ in their forecasts, some bet on a rise of 25 basis points and others 50 basis points. The key economic report that could end the debate will be on Tuesday, with the US Consumer Price Index. These figures will be decisive when considering the Fed’s rate hike. On Wednesday the Producer Price Index will be published and that same day Retail Sales will be reported.
He DXY it peaked at 106.00, the highest level since November, and then fell back to 104.50. The 2-year US Treasury yield rose to 104.50, the highest level since November. The 2-year US Treasury yield hit its highest level since 2007 at 5.08% and fell to 4.58% on Friday, the lowest level in three weeks. Despite the DXY reversal, the dollar maintained weekly gains against emerging market and commodity currencies.
USD/JPY it fell for the second week in a row after failing to consolidate above 137.00 hit by falling bond yields and sell-offs on Wall Street. At the last Kuroda meeting, the Bank of Japan kept its policy rate, Yield Curve control parameters and guidance unchanged.
Among the most bullish values ​​of the week is the Swiss franc, driven by risk aversion, declining yields and Swiss inflation data. USD/CHF suffered the worst weekly loss since November. The Australian dollar lost the most in the G10 after the Reserve Bank of Australia’s moderate rate hike. Next Thursday, Australia will report employment figures. The AUD/USD pair broke through the key support zone of 0.6600 and plunged to its lowest level since November. One of the best of the week was the sale of AUD/CHF after the RBA meeting.
USD/CAD gained more than 200 points during the week, sitting above 1.3800, the second-highest weekly close since May 2020. On Wednesday, the Bank of Canada left rates unchanged (as expected) after eight consecutive hikes, saying which will remain on “a conditional pause”. The Canadian economy added 21,800 jobs in February, above the 10,000 expected.
He EUR/USD erased weekly losses by rising back towards 1.0650 on Friday. The pair continues to move sideways between 1.0530 and 1.0700. Next Thursday, it is expected that the Bank European Central Bank raise interest rates by 50 basis points. Some debate is taking place within the board about its forward guidance. The EUR/GBP pair continues to cling to the 0.8850 area. GBP/USD rebounded from 1.1800, with a high of 1.2115, to settle around 1.2040. UK employment data will be released on Tuesday.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
