FX Outlook : What Is Coming Up This Week?

14th March 2022:

AUD - RBA Meeting Minutes

The AUD and NZD had been uncharacteristically strong in the past few weeks as investors switched their attention to the other side of the globe due to the outbreak of Russia-Ukraine war that stirred up turmoil in the European markets causing the responding currencies to drop. Hence, driving AUD and NZD upwards for the time being.

There is no forecast nor consensus for the RBA announcement. However, we could deduce that an increase would contribute to the continuum of bullish momentum in the AUD and vice versa.

15th March 2022:

GBP - Unemployment Rate (January)

Last week, Canada released its unemployment rate report and that brought upon a spike in the Canadian dollar, so it would be interesting to see what is in store for GBP this week, given that GBP has been dropping dramatically recently, could this spike bring about a reversal in price or a stronger continuation to the downside？

16th March 2022:

CAD - Inflation Rate YoY (Feb)

The consensus is for the Canada Interest Rate to come in at 5.5% (rising 4 basis points from the previous 5.1%). This could serve as the leading indicator for the next decision of the Bank of Canada. If the interest rate rises beyond 5.5%, CAD would most likely to continue its bullish momentum.

On the side note, as CAD is correlated with oil price, once Russia and Ukraine come to terms with ceasefire agreement, we would be expecting a major pullback on the raising oil prices, which will in return cause a drop in CAD.

USD – FOMC Economic Projections, FOMC Statement, Federal Funds Rate, FOMC Press Conference

These events are by far the biggest announcements that are anticipated by investors throughout the globe this week. It is ascertained that both the currency and equity markets will be having wild movements and high volatility levels during this crucial time.

The expectation is that the U.S central bank will hike the interest rate up by 25 basis points to 0.5% - this is the first time in several years. Moreover, the Fed is expecting to have a balance sheet reduction while Powell plans to start his withdrawal of stimulus. The USD is going to face a great level of volatility in the face of these events, natch.

AUD – unemployment rate

As aforementioned, normally in a risk-off environment, AUD would mostly show a weaker sign but because of the geopolitical war, Australia and New Zealand are seen as the safe haven for investors temporarily. The forecast for Australias unemployment rate is just a slight drop of 0.1%. If there was a greater beat, it would be another catalyst for the continuation of bullish movement for AUD.

17th March 2022:

GBP – Bank of England Interest Rate Decision

Similar to the FED interest rate decision, there is an expectation of a 25 basis points raise to 0.75% from 0.5% in order to tame rising inflation by the BoE. That said, the Russia-Ukraine war might create a sense of caution for some policymakers. Would a raise in interest rate cause a spike on GBP and turn the price around, or would it just be a liquidity grab before continuing South？ This is worth noting when GBP arrives at crucial key levels for Pound traders.