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Weekly Outlook: March 18 - 22

3/18/2019, 2:22:32 PMTrading Strategies
Weekly Outlook: March 18 - 22

As investors continue to wait for a breakthrough in U.S.- China trade talks they will get an update on Federal Reserve rate hike projections this week and the central bank could also announce plans to end the wind-down of its balance sheet.

The Fed is widely expected to keep monetary policy unchanged at the end of its two-day policy meeting on Wednesday and policymakers will also update their projections for future rate hikes. In January the Fed indicated that it will be patient as it considers more rate hikes, amid concerns over slowing global growth.

Like the Fed, the Bank of England is expected to hold steady at the end of its meeting on Thursday and any clarity on its policy intentions is likely only after the manner and timing of Brexit becomes evident.

The EU summit on Thursday will be closely watched, first to see if it agrees an extension to the Brexit deadline and second, whether it presses Britain for a delay of one year or more.

The U.S. dollar was broadly lower on Friday and posted the largest weekly drop in over three months as disappointing U.S. economic data weighed.

U.S. manufacturing output fell for a second straight month in February and factory activity in New York state was weaker than expected this month.

The data extended a recent streak of weak economic reports and underlined the case for the Fed’s patient stance on further rate hikes this year.

The U.S. dollar index was 0.24% lower, last at 96.540 and posted its biggest weekly loss since the first week of December.

The euro ended the day little changed against the dollar, with EUR/USD at 1.1326 in late trade.

The pound ended the week at 1.3296, little changed for the day but up 2% for the week, the biggest such gain since late January after the U.K. parliament voted to seek a delay in Britain’s exit from the EU, following a decision to avert a no-deal Brexit.

“The market has some reassurance that the chances of a no-deal Brexit are very low, which is the reason why the currency market has taken this news as a positive. These votes have removed the worst-case scenario,” said Ugo Lancioni, head of global currency at Neuberger Berman in London.

The yen was holding steady, with USD/JPY last at 111.45 after the Bank of Japan kept monetary policy steady but tempered its optimism that robust exports and factory output will underpin growth, giving a boost to its perceived safe-haven status.

Ahead of the coming week, has compiled a list of significant events likely to affect the markets.

Monday, March 18

The U.K. is to release data on house price inflation.

The euro zone will report on trade figures.

Tuesday, March 19

The Reserve Bank of Australia is to publish the minutes of its latest policy setting meeting.

The U.K. is to publish its monthly jobs report.

The ZEW Institute is to publish a report on German economic sentiment.

Wednesday, March 20

The U.K. is to publish data on inflation.

The Federal Reserve is to announce its latest monetary policy decision and Chairman Jerome Powell will hold a press conference to announce the decision.