Week Ahead Preview:
18th of March

Last week, market attention was centred on the US consumer price report for February, highlighting the ongoing need for more time for inflation levels to recede and align with their target. The YoY CPI came in at 3.2%, slightly surpassing the expected 3.1%, while the YoY core CPI data stood at 3.8% compared to the anticipated 3.7%. Consequently, the Federal Reserve is not anticipated to rush into reducing interest rates, given the current economic data. More clarity is expected from this week’s Federal Reserve meeting, where the interest rate decision is projected to remain unchanged at 5.5%. Additionally, the US Central Bank will unveil its economic outlook regarding growth, inflation, and unemployment levels for both the current and subsequent years. The Fed dot plot will also provide insights into the Federal Reserve Committee members’ expectations regarding the trajectory of interest rates in the short and long term, focusing on the number of anticipated cuts and the level of support for such measures. Investors will eagerly await Federal Reserve Chairman Mr. Powell’s press conference for further guidance on US monetary policy.

Meanwhile, this week’s agenda includes meetings of major central banks, with particular emphasis on the Bank of Japan’s meeting. Expectations are divided on whether Japanese policymakers will opt to hike interest rates by 10 basis points during the current or upcoming month’s meeting. Notably, such a move would mark a significant shift for Japanese monetary policy, potentially lifting interest rates out of the negative territory they have lingered in for years.

Market participants are also awaiting the Australian Reserve Bank’s interest rate decision, anticipated to remain unchanged at 4.35%. The forthcoming report on inflation levels of 2024-Q1 will play a crucial role in shaping market expectations regarding the possibility of interest rate reductions in the third quarter of this year.

Similarly, investors are keeping an eye on the Swiss interest rate decision, expected to hold steady at 1.75%. However, the Central Bank’s intervention in the Swiss franc’s exchange rate remains key factors influencing monetary policy. It is expected that interest rate reductions may be postponed until the June meeting.

Finally, before the week concludes, investors will follow the Bank of England interest rate decision, expected to remain unchanged at 5.25 %. The Central Bank’s focus remains on inflation levels stemming from the services sector and high wage rates. A continued decline in these indicators could prompt the Monetary Policy Committee to consider interest rate cuts at the August meeting.

Economic Data Highlights (As per UAE time) 

Monday 18th of March

• EUR- Inflation rates (Feb)

Tuesday 19th of March

• Bank of Japan rate decision & press conference
• RBA rate decision
• EUR- Zew economic sentiment (Mar)
• USD- Housing starts and building permits (Feb)
• CAD- Inflation rates (Feb)

Wednesday 20th of March

• GBP- Inflation rates (Feb)
• ECB president Lagard’s speech
• US Crude inventories
• Fed Rates decision, economic projections, dot plot & press conference

Thursday 21st of March

• NZD- GDP (Q4-2023)
• AUD- Unemployment rate (Feb)
• SNB rate decision & press conference
• EUR- Flash Manufacturing & services PMI (Mar)
• GBP- Flash Manufacturing & services PMI (Mar)
• Band of England rate decision
• USD- Flash Manufacturing & services PMI (Mar)

Friday 22nd of March

•  JPY- Inflation rates (Feb)
• GBP- Retail sales (Feb)
• EUR- IFO business expectations (Germany- Mar)
• CAD- Retail sales (Jan)