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Forex Major Currencies Outlook (Mar 22 – Mar 26)

Preliminary March PMI data will highlight the week followed by inflation and spending data from the US.


Headline retail sales in February came in at -3% m/m vs -0.5% m/m as expected. January reading was revised higher to 7.6% m/m from 5.3% m/m as previously reported which makes headline number come almost along the expectations. Other categories had the similar faith with control group coming in at -3.5% m/m vs -0.6% m/m as expected with January upward revision to 8.7% m/m from 6% m/m. Sales in February were up 6.3% y/y. Extreme weather in February is the main culprit for the drop. Auto sales category showed the biggest drop while gas station sales rose 3.6%, thus making it the only category that rose. Additional stimulus cheques, combined with normal weather should propel this number higher in March reading. 

Fed has left rates and monetary policy unchanged as was widely expected reiterating that asset purchases will continue until “substantial further progress” is made. They have come up with new macroeconomic projections showing improvements in all measures. GDP is now seen between 5.8% and 6.6% for 2021. The unemployment rate is seen between 4.2% and 5.7% while PCE is seen between 2.2% and 2.4% for 2021. Dot-plot shows that several members now see rate hike in 2023. Fed Chairman Powell stated that the economy is still far away from recovery as indicated by almost 9.5 million unemployed more than before the pandemic. He reiterated that full employment and price stability should be shown in data, not in expectations. Additionally, Fed looks at a broad number of employment measures, with the unemployment rate being just one of them. Overall, there seems to be no rush for rate hikes. The markets understood the dovishness of Fed and pushed USD lower. During the week USD managed to recover due to the rise in yields since Fed did not mention anything about possible new “Operation Twist” (Selling near-end Treasuries to buying long-end in order to reduce yields on long-end Treasuries). The rise in yields was characterized as a good sign of a recovering economy. When asked about SLR Chairman Powell declined to comment stating that an announcement will be made in the coming days and on Friday it was announced that there will be no extension. Current SLR is ending on March 31 and should lead to the drop in banks liquidity which could lead to lower lending and lower acceptance of deposits. 

This week we will have final Q4 GDP reading as well as Fed’s preferred inflation measure PCE. 

Important news for USD: 


  • GDP


  • PCE 


We got first March data in the form of German ZEW survey. Current situation improved to -61 from -67.2 in February while expectations rose to 76.6 from 71.2 the previous month. The rise in expectations shows the optimism regarding vaccine developments with ZEW noting that anticipations are for around 70% of the population to be vaccinated by the autumn. Caveat is that survey was done prior to the AstraZeneca issue. Germany has stopped administering AstraZeneca vaccine due to the research showing it caused blood clot problems with number of patients. After the investigation into the issue has been done by EMA it has been concluded that there is no connection between vaccine and blood clots. Countries will continue to administer AstraZeneca vaccines and ZEW survey data stands. 

This week we will have preliminary March PMI data. 

Important news for EUR: 


  • Markit Manufacturing PMI (EU, Germany and France)
  • Markit Services PMI (EU, Germany and France)
  • Markit Composite PMI (EU, Germany and France) 


BOE has left bank rate and asset purchases unchanged as was widely expected. Members have acknowledged some positives in financial conditions that occurred since February, but overall, there were no hawkish moments in the statement. They have reiterated their resolve to take additional measures if inflation outlook weakens adding that they do not intend on tightening monetary policy conditions until there is enough evidence regarding achieving the inflation target. There was no talk about recent rise in 10y yields. GBP was sent down on their message as markets were hoping for more upbeat statement. 

This week we will have plethora of economic data including employment, inflation, preliminary March PMI and consumption data. 

Important news for GBP: 


  • Employment Change
  • Unemployment Rate


  • CPI
  • Markit Manufacturing PMI
  • Markit Services PMI
  • Markit Composite PMI


  • Retail Sales 


RBA minutes from the March meeting show that wage growth needs to reach 3% for bank members to raise interest rate and the rise is not expected until 2024. February employment report went in RBA’s desired direction. Employment change came in at 88.7k vs 30k as expected. The unemployment rate fell to 5.8% from 6.3% in January with participation rate staying the same at 66.1%. All of the jobs were full-time as full-time employment came in at 89.1k. A tremendously strong report and if it now pushes wage growth we may see a rate hike before 2024 target. 

Chinese data for the two-month period of January-February showed huge boost impacted by the base effect, that is comparing the data with period of January-February 2020 when country was fighting with the coronavirus induced lockdowns. Industrial production came in at 35.1% y/y while retail sales came in at 33.8% y/y. Both readings beat expectations. Jewellery, automobiles and catering were the biggest contributors to the growth of retail sales while automobiles and micro-processors lead the way in industrial production growth. 


Q4 GDP data surprised to the downside by coming in at -1% q/q vs 0.2% q/q as expected. We are now in the middle of March so this data is ancient history, however given the data concerning Q1 we may see New Zealand getting back into recession as measured by two consecutive quarters of negative GDP growth. GDT price index came in at -3.8% thus making the first decline after eight consecutive auctions with rising prices. 


February headline inflation ticked higher to 1.1% y/y from 1% y/y in January. Analysts were expecting a 1.3% y/y reading. Median and common core measures came in unchanged from the previous month at 2% y/y and 1.3% y/y respectively while trim slipped to 1.9% y/y from 2% y/y in January. Appliance prices were the biggest contributor to the rise in inflation followed closely by gasoline prices while clothing prices were the main drag. March reading will be far more interesting as it will be impacted by the base effect from first lockdown. Retail sales in January fell -1.1% m/m vs -3% m/m as expected. Second straight month of drops but much less than expected. Around 1 in 7 retailers was impacted by lockdown in January. Advanced February reading shows a jump of 4% m/m breaking the two month of drops and painting brighter picture of Canadian consumers. 


BOJ has left short-term interest rate unchanged and modified its monetary policy. Yields on 10y JGB will remain at 0% but range in which they can fluctuate has been widened to 25bp from 20bp previously. This is the most hawkish move from BOJ so far. There will be no upper limit on JGB purchases. The other change refers to ETF purchases. The bank has abandoned their JPY6 trillion annual target. Upper limit of JPY12 trillion is still in place. Governor Kuroda stated that their ETF purchases are not undermining stock market purchases and that they are prepared to ease further if the need arises. Inflation on the national level for February showed some improvements with both headline and ex fresh food categories coming in at -0.4% y/y as expected vs -0.6% y/y in January. Still deflation is ruling Japan and it will stay there for a while. 

This week we will have preliminary March PMI data as well as inflation data for March for Tokyo area. 

Important news for JPY: 


  • Markit Manufacturing PMI
  • Markit Services PMI
  • Markit Composite PMI


  • CPI 


SNB total sight deposits for the week ending March 12 came in at CHF702.8bn, down from CHF703.1bn as markets keep EURCHF hovering around the 1.11 level. 

This week we will have SNB meeting. No changes in rate and policy are expected. 

Important news for CHF: 


  • SNB Interest Rate Decision

You can follow all economic events on the Economic Calendar page on our Website. MT server time is set to GMT+2 and if you need assistance converting MT server time to your local time you can use some of the online time converters such as WorldTimeBuddy.

Please note that this analysis should not be used as investing advice as it is only an overview of the economic events influencing the markets. Please remember that our accounts have Market Execution. Please note how Execution works during high impact news and other times of low liquidity.

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