Wednesday will be an active day for the global financial markets, as investors assess the latest policy verdict from the US Federal Reserve. Although a rate hike is a “virtual lock,” the official statement could provide clues about the Fed’s mid-term outlook on monetary policy. What else will drive the markets today? Let’s take a look at the 21 March Market Moving Fundamental Events.
21 March, HotForex – Stock markets continued to stabilize during the Asian session. Japan was closed for a holiday, which meant thinner trade, but elsewhere energy-related stocks helped markets to recover from the slump in tech stocks that hit global markets at the beginning of the week.
European Market Outlook
Oil prices lifted to a high of USD 63.85 overnight, on news that the OPEC led alliance of oil producers accelerated plans to curb the worldwide supply glut. The ASX closed with a gain of 0.23% and the Hang Seng is up 0.61%, after a positive close on Wall Street, although, U.S. futures are struggling to move higher as the focus shifts to the Fed announcement and markets remain split on whether the Fed will lift its rate hike scheduled for this year.
The holiday in Japan meant Treasuries were not traded overnight and elsewhere long yields were mixed across Asia, with slightly lower 10-year rates in China and Australia, while New Zealand’s 10-year moved higher.
The dollar majors have plied narrow ranges to far today. EURUSD lifted to the north of 1.2250 after logging a three-week low yesterday at 1.2239, which capped a recent down move driven by a widening in the U.S. Treasury over Bund yield spread. USDJPY has settled to a consolidation with a modest downward drift after a two-day run higher. The pair drifted back under 106.50 after yesterday printing a one-week high at 106.60.
Japanese markets were closed today for a public holiday in Japan, exacerbating thin market conditions with many market participants sitting on their hands into the Fed policy announcement and SEP (Summary of Economic Projections) today. Market’s median expectation is forecasting a 25 bp rate hike, to boost the funds band to 1.50% to 1.75%.
It is widely expected that the Committee will leave the dot plot medians at 3 hikes this year and next, though policymakers are likely to upgrade their forecasts on growth and lower their view on the unemployment rate. USDCAD dipped to a four-session low of 1.3010 on news of progress on the NAFTA front, with the U.S. dropping its contentious auto-content proposal.
Main Macro 21 March Market Moving Fundamental Events
- UK Labour Market Data- Labor data expected to show the unemployment rate remaining unchanged at 4.4%, and with average earnings in the three months to January to rise by 2.6% y/y
- Existing Home Sales – expected to rebound 1.9% to a 5.415 mln pace, recovering somewhat from the 3.2% January drop to 5.380 mln and December’s 2.8% decline to 5.560 mln.
- FOMC Statement and Funds Rate decision – A 25 bp tightening in the funds’ rate band to 1.50% to 1.75% is as sure a bet as there can be. But there’s considerable uncertainty over the trajectory of rate hikes and whether the FOMC will opt to maintain the outlook for 3 tightenings this year, or revise up to 4.
- FOMC Press Conference
- RBNZ Rate Statement – RBNZ expected to hold the policy rate steady at 1.75% and maintain that monetary policy will remain accommodative for a considerable period.
Support and Resistance levels
This article about 21 March Market Moving Fundamental Events was written by Andria Pichidi, Market Analyst at HotForex. The provided article is a general marketing communication for information purposes only. It does not constitute an independent investment research. Nothing in this communication contains an investment advice or an investment recommendation. It also does not contain a solicitation for the purpose of buying or selling of any financial instrument.
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