Author: The Forex Feed

The Japanese yen has lost ground against the dollar for a second straight day.  In the North American session, USD/JPY is trading at 143.39, up 0.43% on the day.  Earlier, USD/JPY rose as much as 0.96% but pared much of those gains.

US inflation lower than expected

US inflation surprised on the upside in February.  Headline inflation eased to 0.2% m/m from 0.5% and below the market estimate of 0.3%. Annually, headline inflation dropped to 2.8% from 3% and below the market estimate of 2.9%.

It was a similar story for core CPI, which fell to 0.2% from 0.4%, below the market estimate of 0.3%. Annually, the core rate dropped to 3.1% from 3.3%, shy of the market estimate of 3.2%. This marked the lowest level since April 2021 and the decline is significant as core inflation has been sticky and well above the Federal Reserve’s target of 2%.

Japan’s GDP revised lower

Japan’s GDP expanded 2.2% y/y in the fourth quarter of 2024, lower than the initial estimate of 2.8%. The revision was expected to stay largely unchanged but was pushed lower due to a decrease in inventories and consumption.

The GDP downward revision follows other soft data which points to weakness in Japan’s economy.  Household spending slumped 4.5% m/m in January.  This was a sharp reversal from the 2.3% gain in December and missed the  estimate of -1.9%.  Annualized, household spending rose 0.8%, below the 2.7% in December and the market estimate of 3.6%.  On Monday, the wage growth report indicated that real wages declined by 1.8% in January, after two months of growth.

How will the Bank of Japan react to the string of weak data? The annual wage negotiations are close to a deal and the BoJ has urged companies and workers to reach a deal that significantly raises wages.  This would boost growth and consumption and help keep inflation sustainable at the BoJ’s 2% target.

The unions are asking for an average wage hike of 6%, up from 5.8% last year and the highest in more than 20 years.  Last year’s wage agreement led to the BoJ raising rates for the first time since 2007 and this year’s wage deal could pave the way for another rate hike.  The BoJ holds its next meeting on Mar. 19, five days after the wage settlement will be announced.  The BoJ isn’t expected to make a move next week but investors are circling April or May as potential dates for a rate hike.

 USD/JPY Technical

• USD/JPY has pushed above resistance at 147.96 and is putting pressure on resistance at 148.56. The next resistance line is 148.86
• 147.96 and 147.66 are the next support levels

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2025.03.12 2025.03.12
Pound Surges Amid Robust UK Data. Forecast as of 12.03.2025

Dmitri Demidenkohttps://www.litefinance.org/blog/authors/dmitri-demidenko/

The UK aims to ramp up trade with the US and avoid tariffs. This decision, influenced by robust macroeconomic data and capital inflows, has boosted the GBPUSD pair. The question remains whether this positive trend will persist. Let’s discuss this topic and make a trading plan.

Major Takeaways

• The US does not rule out that the UK can avoid tariffs.
• The UK wants to increase trade with the US.
• Capital is flowing from North America to Europe.
• If a trade war sparks, one can sell the EURGBP pair on a breakout of 0.8425.

Weekly Fundamental Forecast for Pound Sterling

The United Kingdom has been trying to charm the US president with statements about its willingness to increase trade with the US and is getting a hint that tariffs can be avoided. This, coupled with positive macroeconomic statistics, has led to a 7% surge in the GBPUSD rate compared to the January highs. Notably, this bullish trend is likely to continue.

Chancellor Rachel Reeves points out that Britain’s trade volume with the US increased during Donald Trump’s first term. The official anticipates a similar outcome during Trump’s second tenure. In 2024, the total value of goods and services traded between the two countries amounted to £294 billion. During a meeting with British Prime Minister Rishi Sunak in Washington, US President Donald Trump stated that he was working on a trade agreement and suggested that London could avoid tariffs if it complied with its terms.

In the Forex market, rumors are circulating that during a global trade war, the currencies of neutral countries not directly involved in the conflict can benefit the most. In this context, the heightened investor interest in the British pound appears well-founded.

This is particularly relevant given that recent data on the UK’s GDP and retail sales has surpassed expectations, leading to a shift away from a stagflationary scenario. While prices remain high, this limits the Bank of England’s ability to aggressively cut rates. However, if the economy continues to improve, this will not be necessary.

Capital flows from North America to Europe, including those driven by Germany’s planned amendments to the fiscal brake rule, support the GBPUSD bullish trend. Since the beginning of the year, the FTSE 100 index has gained 4.5%, while the S&P 500 has lost 5.3%. UK 10-year bond yields are 45 basis points higher than their US counterparts. Investors are seeking opportunities in the UK market, which is more attractive than that of the US.

Thus, the GBPUSD rally is based on the high probability that the UK will avoid tariffs, a shift from the stagflationary scenario, and capital inflows due to the greater attractiveness of UK assets.

US Imports of Steel and Aluminum

Source: Bloomberg.

The decision of the United States to impose 25% tariffs on steel and aluminum has led to a global trade war. In response, the EU plans to impose retaliatory tariffs on US goods amounting to €26 billion. This development signals the beginning of a protracted trade dispute. It is likely that the shift in Germany’s fiscal policy from restraint to spending has already been factored in the euro quotes.

Weekly EURGBP and GBPUSD Trading Plan

Therefore, a large-scale conflict between Washington and Brussels will create an opportunity to sell the EURGBP pair on a breakout of the support level of 0.8425. As for the GBPUSD pair, one may consider long trades, adding them to the ones formed at 1.2355 if US inflation slows significantly.

This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.

Price chart of GBPUSD in real time mode

2025.03.11 2025.03.12
Economic Calendar for the Week 17.03.2025–23.03.2025

Jana Kanehttps://www.litefinance.org/blog/authors/jana-kane/

The US dollar experienced challenges in the first half of the month, facing pressure from shifting investor sentiment. Experts predict that rising trade tariffs in the US will place strain on importers and manufacturers of goods, including imported components. Ultimately, this will affect US consumers, who may need to incur higher costs to offset the losses of importers. Investor sentiment is being influenced by long-term negative factors related to the tariff hike and new trade wars, which may exacerbate existing economic trends in the US, leading to a weakening of the US dollar.

In the upcoming week, 17.03.2025–23.03.2025, market participants will focuse on the publication of important macroeconomic data on China, the US, Canada, New Zealand, Australia, the UK, as well as the results of the Bank of Japan, the US Fed, the People’s Bank of China, the Swiss National Bank and the Bank of England meetings.

The key event will probably be the release of the US Fed meeting results on Wednesday.

Note: During the coming week, new events may be added to the calendar, and/or some scheduled events may be canceled. GMT time

Major Takeaways

• Monday: important macroeconomic data from China, US retail sales report.
• Tuesday: Canadian CPIs.
• Wednesday: Bank of Japan and US Fed meetings, New Zealand GDP.
• Thursday: Australian and UK labor market data, Swiss and UK central banks’ meetings.
• Friday: no important macro statistics is scheduled.
• Key event of the week: US Fed meeting on 18–19 March.

Monday, March 17

02:00 – CNY: Industrial Production. Retail Sale

The National Bureau of Statistics of China report on industrial production shows the output of Chinese industrial enterprises, such as factories and manufacturing facilities. The increase in industrial production is a positive factor for the yuan, indirectly signaling the possibility of accelerating inflation, which may force the People’s Bank of China to tighten monetary policy.

Conversely, the decline in the indicator value may negatively impact the yuan.

Previous values YoY: +6.2%,+5.4%, +5.3%, +5.4%, +4.5%, +5.1%, +5.3%, +5.6%, +6.7%, +4.5%, +7.0%, +6.8%, +6.6%, +4.5%, +3.7%, +4.4%, +3.5%, +5.6%, +3.9%, +2.4% in February 2023.

The retail sales level index, published monthly by the National Bureau of Statistics of China, gauges the change in the aggregate value of sales at the retail level across the country. The index is often viewed as an indicator of consumer confidence and economic prosperity and reflects the state of the retail sector in the near term. An increase in the index value is usually positive for the yuan, while a decrease in the index value will affect it negatively. Previous values YoY: +3.7%, +3.0%, +4.8%, +3.2%, +2.1%, +2.7%, +2.0%, +3.7%, +2.3%, +3.1%, +5.5%, +7.4%, +10.1%, +4.6%, +2.5%, +3.1%, +12.7%, +18.4%, +10.6%, +3.5%, -1.8%, -5.9% after +8% in the last months of 2019 and -20.5% in February 2020.

The data indicate that this sector of the Chinese economy continues to recover after a strong decline in February and March 2020. If the data prove weaker than the forecasted or previous values, the yuan may experience a decline, potentially a sharp one.

China is a major buyer of commodities and a supplier of a wide range of finished goods to the global commodity market. Since China’s economy is the second largest in the world, the release of its significant macroeconomic indicators can profoundly influence the overall financial market.

Besides, China is the largest trading partner of Australia and New Zealand, purchasing a significant amount of commodities from these countries.

Therefore, positive macro statistics from China may also exert a positive influence on these commodity currencies. Conversely, if the anticipated data indicates a deceleration in one of the world’s largest economies, it would be a detrimental factor for global stock markets and commodity currencies.

12:30 – USD: Retail Sales. Retail Sales Control Group

This Census Bureau report on retail sales reflects the total sales of US retailers of all sizes and types. The change in retail sales is a key indicator of consumer spending. The report is a leading indicator, and the data may be subject to significant revisions in the future. High indicator readings strengthen the US dollar, while low readings weaken it. A relative decline in the indicator may have a short-term negative impact on the US dollar, while a rise in the indicator will positively impact the currency.

In January 2025, the value of the indicator stood at 0.9% (after +0.4% in December, +0.7% in November, +0.4% in October and September, +0.1% in August, +1.1% in July, -0.2% in June, +0.2% in May, -0.2% in April, +0.5% in March, +0.7% in February, -1.1% in January 2024).

Retail sales are the main indicator of consumer spending in the United States, showing the change in the retail industry.

Retail sales serve as an indicator of domestic consumption, contributing the most to the US GDP and being one of the main factors of inflation risks increase or decrease. Deterioration of the indicator values is a negative factor for the US dollar. Inflation deceleration may prompt the Fed to begin the process of monetary policy easing.

The Retail Control Group indicator gauges volume in the retail industry and is used to calculate price indexes for most goods. High readings strengthen the US dollar, while low results weaken the currency. A slight increase in the figures is unlikely to boost the dollar. If the data is lower than the previous readings, the dollar may be negatively impacted in the short term. Previous values: -0,8%, +0.7%, +0.4%, -0.1%, +0.7%, +0.3%, +0.4%, +0.9%, +0.4%, -0.3%, +0.9%, 0%, -0.4% in January 2024, +0.6%, +0.2%, +0.2%, +0.2%, +0.2%, +0.7%, +0.3%, +0.4%, +1.0%, -1.2%, -0.1%, +2.6% in January 2023.

Tuesday, March 18

12:30 – CAD: Canadian Consumer Price Indexes

The Consumer Price Index (CPI) reflects the retail price trends of a selected basket of goods and services. Meanwhile, the Core CPI excludes fruits, vegetables, gasoline, fuel oil, natural gas, mortgage interest, intercity transportation, and tobacco products. The inflation target for the Bank of Canada ranges between 1% and 3%. A higher CPI reading is a sign of a rate hike and is positive for the Canadian dollar.

Previous values:

• CPI:+0.7% (+1.9% YoY), -0.4% (+1.8% YoY), 0% (+1.9% YoY), +0.4% (+2.0% YoY), -0.4% (+1.6% YoY),-0.2% (+2.0% YoY), +0.4% (+2.5% YoY), -0.1% (+2.7% YoY), +0.6% (+2.9% YoY), +0.5% (+2.7% YoY), +0.6% (+2.9% YoY), +0.6% (+2.9% YoY), +0.3% (+2.8% YoY), 0% (+2.9% YoY), -0.3% (+3.4% YoY), +0.1% (+3.1% YoY), +0.1% (+3.1% YoY), -0.1% (+3.8% YoY), +0.4% (+4.0% YoY), +0.6% (+3.3% YoY), +0.1% (+2.8% YoY);
• Core CPI released by the Bank of Canada: +0,4% (+2.1% YoY), +0.3% (+1.8% YoY), -0.1% (+1.6% YoY), +0.4% (+1.7% YoY), 0% (+1.6% YoY), -0.1% (+1.5% YoY), +0.3% (+1.7% YoY), -0.1% (+1.9% YoY), +0.6% (+1.8% YoY), +0.2% (+1.6% YoY), +0.5% (+2.0% YoY), +0.1% (+2.1% YoY), +0.1% (+2, 4% YoY), -0.5% (+2.6% YoY), +0.1% (+2.8% YoY), +0.3% (+2.7% YoY), -0.1% (+2.8% YoY), +0.1% (+3.3% YoY), +0.5% (+3.2% YoY), -0.1% (+3.2% YoY).

The data suggests that inflation continues to decelerate, which prompts the Canadian central bank to consider implementing a dovish monetary policy. If the expected data is worse than the previous values, it will negatively affect the Canadian dollar, but if the data exceeds expectations, it will bolster the currency.

Wednesday, March 19

After 03:00 (Exact Time Not Specified) – JPY: Bank of Japan Interest Rate Decision. Bank of Japan Press Conference and Commentary on Monetary Policy

The Bank of Japan will decide on the interest rate. At the moment, the benchmark rate in Japan is 0.50%. The rate will likely remain at the same level. If the rate is cut and returns to negative values, the yen may decline sharply in the currency market, and the Japanese stock market will likely increase. Anyway, a spike of volatility in the yen and Asian financial market is expected during this period.

Since February 2016, the Bank of Japan has kept the deposit rate at -0.1% and the 10-year bond yield target around 0%.

During the 19 March meeting, the BoJ made the decision to increase the interest rate by 10 basis points, shifting it from -0.1% to 0% for the first time since 2007, thus concluding the period of negative interest rates that commenced in 2016. Concurrently, the target for long-term JGBs (YCC) was scrapped, although the BoJ intends to maintain the same level of JGB purchases per month without a specific target. On the other hand, the bank will cease the purchase of ETFs and REITs, gradually decrease, and eventually terminate the acquisition of commercial paper and corporate bonds within 12 months.

According to analysts, if the BoJ hints at further rate hikes, the yen will receive significant support.

During the press conference, BoJ governor Kazuo Ueda will comment on the monetary policy. Despite certain tightening measures, the BoJ continues to adhere to an extra-soft monetary policy. According to former Japanese central bank governor Haruhiko Kuroda, Japan should continue its current soft monetary policy. Markets usually respond prominently to speeches by the BoJ governor. The governor will likely mention the monetary policy again during his speech, leading to increased volatility not only in the yen but also in Asian and global financial markets.

06:30 – JPY: Bank of Japan Press Conference

During the press conference, Bank of Japan Governor Kazuo Ueda will comment on the bank’s monetary policy and interest rate decision. Markets usually react noticeably to speeches of the BoJ governor. If he touches on monetary policy during his speech, volatility will rise not only in the yen but also across Asian and global financial markets.

18:00 – USD: US Fed Interest Rate Decision. Fed Commentary on Monetary Policy. FOMC Economic Projections

During the first half of 2024, the US Fed policymakers left monetary policy parameters unchanged at multiple meetings, maintaining the key interest rate at 5.50%. However, at the September, November, and December meetings, the US Fed’s leaders reduced the interest rate to the current 4.50% and did not rule out further reductions. Notably, a month before these decisions, US Fed Chairman Jerome Powell stated that the US central bank’s focus was shifting toward ensuring stability in the labor market. However, Powell emphasized that any decisions regarding interest rates would still hinge on the prevailing economic conditions.

Now, market participants expect the US central bank to continue its monetary easing cycle. Nevertheless, there is also a possibility of an interest rate hike if inflation starts to rise again, as Fed Chairman Jerome Powell has repeatedly warned earlier.

It is widely anticipated that the rate will remain unchanged at 4.50% at the upcoming meeting.

The financial market may experience higher volatility when the rate decision is announced, particularly in the US stock market and the US dollar, especially if the rate decision does not match the forecast or the Fed makes unexpected statements.

Powell’s commentaries may affect short-term and long-term trading in the US dollar. The Fed’s more aggressive approach to monetary policy is a positive factor that would strengthen the US dollar, while a more cautious position is negative for the greenback. Investors are eagerly awaiting Powell’s remarks on the Fed’s upcoming plans for this year and the next.

Besides, the Fed will release a report with projections on the interest rate, inflation, and economic growth for the next 1–2 years and beyond. Additionally, the perspectives of individual FOMC members on interest rates will be of great interest to market participants.

18:30 – USD: US Federal Reserve Open Market Committee Press Conference

The US Federal Reserve Open Market Committee (FOMC) press conference lasts approximately one hour. The resolution is read in the first part of the meeting, followed by a Q&A session, which may increase market volatility. Any unexpected statements by Jerome Powell on the Fed’s monetary policy will cause a hike in volatility in the US dollar and the US stock market.

21:45 – NZD: New Zealand GDP for Q4

The data release will heighten volatility in the New Zealand dollar. Given the recent rise in commodity and agricultural prices, particularly for dairy products, New Zealand’s major export, and considering that the coronavirus pandemic has least affected New Zealand compared to other large economies, the New Zealand Q4 2024 GDP report will likely be positive.

Previous values YoY: -0.3%, -0.5%, +0.3%, -0.3%, -0.6%, +1.5%, +2.2%, +2.3%, +6.4%, +0.3%, +1.0%, +3.0% in Q4 2022.

Data so far remains contradictory, indicating a halt in the New Zealand economic recovery at the end of 2023 after a downturn in the first half of 2020. If data is worse than previous values, it will negatively affect the New Zealand dollar.

Thursday, March 20

00:30 – AUD: Employment Rate. Unemployment Rate

The employment rate reflects the monthly change in the number of employed Australian citizens. The increase in the indicator value positively impacts consumer spending, stimulating economic growth. A high reading is positive for the Australian dollar, while a low reading is negative. Previous indicator values: +44,000 in January 2025,+56,300 in December 2024, +35,600 in November, +15,900 in October, +64,100 in September, +42,600 in August, +48,900 in July, +52,300 in June, +39,500 in May, +37,400 in April, -6,100 in March, +120,400 in February, +11,900 in January 2024, -58,900 in December 2023, +55,500 in October, +13,400 in September, +62,300 in August, 0 in July, +19,800 in June, +83,800 in May, -14,700 in April, +93,800 in March, +45,100 in February, 23,100 in January 2023.

Besides, the Australian Bureau of Statistics will publish a report on the unemployment rate. It is an indicator that estimates the ratio of the share of the unemployed population to the total number of working-age citizens. The rise in the indicator readings demonstrates the weakening of the labor market, negatively impacting the national economy. A decrease in the indicator is positive for the Australian dollar.

Forecast: Australian unemployment has remained at its lowest levels and stood at 4.1% in February (against 4.1% in January 2025, 4.0% in December, 3.9% in November, 4.1% in October, September, and August, 4.2% in July, 4.1% in June, 4.0% in May, 3.8% in April, 3.7% in March and February, 4.1% in January, 3.9% in December and November, 3.8% in October, 3.6% in September, 3.7% in August and July, 3.5% in June, 3.6% in May, 3.7% in April, 3.5% in March and February, 3.7% in January, 3.5% in December, 3.4% in November and October, 3.5% in September and August, 3.4% in July, 3.5% in June, 3.9% in May and April, 4.0% in March and February, 4.2% in January), while the employment rate has increased.

The Reserve Bank of Australia has repeatedly stated that the Australian economy and the central bank’s plans are influenced by key indicators like the level of household debt and spending, wage growth, and the state of the labor market, in addition to the international trade situation. If the indicator readings are lower than expected, the Australian dollar may decline significantly in the short term, while higher data will strengthen the currency.

01:15 – CNY: People’s Bank of China Interest Rate Decision

Since May 2012, the People’s Bank of China has been lowering its interest rate to support Chinese manufacturers. Last time, the bank reduced the rate in October 2024 after a long pause since August 2023, bringing the rate down by 0.1% to its current level of 3.10%.

In 2024, the world’s major central banks have also started a policy easing cycle amid slowing inflation. What will the Chinese central bank do this time after pausing since September 2023 and easing policy in July 2024?

The People’s Bank of China will likely keep the interest rate unchanged at 3.10% at this meeting, although other decisions are also possible.

Should the People’s Bank of China make statements that deviate from expectations, volatility may increase across the entire financial market, particularly in the Asian one. Investors will closely watch the bank’s assessment of the Chinese economy’s prospects and its policy stance in the short term.

07:00 – GBP: Average Weekly Earnings Over the Last Three Months. Unemployment Rate

The UK Office for National Statistics monthly publishes a report on average weekly earnings covering the period for the last three months, including and excluding bonuses.

This report is a key short-term indicator of employee average earnings changes in the UK. An increase in wages is positive for the British pound, whereas a low indicator value is unfavorable. Forecast: The March report suggests that average earnings, including bonuses, rose again in the last three months, including November, December, amd January, after gaining +6.0%, +5.6%, +5.2%, +4.3%, +3.8%, +4.0%, 4.5%, +5.7%, +5.9%, +5.7%, +5.6%, +5.6%, +5.8%, +6.5%, +7.2%, +7.9%, +8.1%, +8.5%, +8.2%, +6.9%, +6.5%, +5.8%, +5.9%, +6.0%, +6.5%, +6.%, +6.1%, +5.5%, +5.2%, +6.4%, +6.8%, +7.0%, +5.6%, +5.7%, +4.8%, +4.3%, +4.2% in previous periods. The earnings value excluding bonuses also increased with percentages at +5.9%, +5.6%, +5.2%, +4.8%, +4.9%, +5.1%, +5.4%, +6.0%, +6.0%, +6.0%, +6.1%, +6.2%, +6.6%, +7.3%, +7.7%, +7.8%, +7.8%, +7.8%, +7.8%, +7.3%, +7.2%, +6.7%, +6.6%, +6.6%, +6.7%, +6.5%, +6.1%, +5.8%, +5.5%, +5.2%, +4.7%, +4.4%, +4.2%, +4.2%, +4.1%, +3.8%, +3.7%, +3.8% in previous periods. These figures show continued growth in employee earnings levels, which is positive for the British pound. If the data outperforms the forecast and/or previous values, the pound will likely strengthen in the currency exchange market. Conversely, if the data falls short of the forecast/previous values, the pound will be negatively affected.

The UK unemployment data will be released at the same time. Unemployment is expected to stand at 4.4% for the three months of November, December, amd January, (against 4.4%, 4.4%, 4.3%, 4.3%, 4.0%, 4.1%, 4.2%, 4.4%, 4.4%, 4.3%, 4.2%, 4.0%, 3.8%, 3.9%, 4.0%, 4.1%, 4.2%, 4.3%, 4.2%, 4.0%, 3.9% in previous periods).

Since 2012, the UK unemployment rate has fallen steadily from 8.0% in September 2012. The unemployment decline is a positive factor for the pound, while its growth negatively impacts the currency.

If the UK labor market data appears to be worse than the forecast and/or the previous value, the pound will be under pressure.

Regardless, when the UK labor market data is released, the pound and the London Stock Exchange are expected to experience increased volatility.

08:30 – CHF: Swiss National Bank’s Interest Rate Decision. SNB Monetary Policy Statement

Before the June 2022 SNB meeting, the deposit rate was negative and stood at -0.75%. However, this central bank meeting resulted in the rate being raised to -0.25%.

In the accompanying statement, SNB chairman Thomas Jordan noted that the Swiss franc is no longer overvalued. He also mentioned that the implementation of a tighter monetary policy is intended to prevent an increase in inflation in Switzerland.

Recently, the Swiss franc has once again gained popularity as a safe-haven asset. However, the possibility of intervention is currently preventing the currency from experiencing significant growth. SNB executives emphasize that intervening in the foreign exchange market is crucial for maintaining the low investment appeal of the franc and alleviating upward pressure on the currency.

The deposit rate is widely anticipated to remain at 0.5% at the end of the March 2025 meeting, following the unexpected reductions by 0.25% at the March, June, and September 2024 meetings.

Besides, traders will scrutinize the SNB statement for signals regarding the further monetary policy plans. The hawkish tone of the statement will favor the Swiss franc. Conversely, the soft tone and inclination to resume the loose monetary policy will negatively affect the currency. If the SNB board makes unexpected statements, volatility in the currency market and the Swiss franc is expected to increase.

09:00 – CHF: Swiss National Bank Press Conference

The SNB press conference will commence after the release of the interest rate decision. During the press conference and the speech of SNB chairman Martin Schlegel, who succeeded Thomas Jordan at the end of September 2024, volatility in the Swiss franc will surge. Traders expect signals regarding further plans for the SNB’s monetary policy. The hawkish tone of Martin Schlegel’s speech will bolster the Swiss franc, while a softer tone and the SNB’s inclination towards a soft monetary policy will negatively affect the franc.

11:00 – GBP: Bank of England Interest Rate Decision. Bank of England Meeting Minutes. Bank of England’s Asset Purchase Facility. Monetary Policy Report

As a result of the August 2023 meeting, the interest rate was increased to 5.25%. The Bank of England’s Monetary Policy Committee has decided to raise borrowing costs amid a robust labor market to curb price growth. However, further tightening of monetary policy may be required to bring inflation to the 2.0% target.

Since the September 2023 meeting, the Bank of England has maintained a wait-and-see stance. Finally, on August 1, 2024, the Bank of England cut the interest rate by 0.25% to 5.00%, marking the first cut since August 2023. The rate currently stands at 4.50%.

At the upcoming meeting, the Bank of England may decide to cut interest rates again, given the declining inflation in the country, or take a pause, considering the positive macro data from the UK and the complex geopolitical situation in Europe, particularly in Ukraine.

Analysts believe that the Bank of England may reduce the interest rate. However, the market reaction may be unpredictable.

At the same time, the BoE will publish the Monetary Policy Committee (MPC) minutes, including a breakdown of the votes for and against interest rate changes. The main UK risks after Brexit are related to expectations of a slowdown in the country’s economic growth, as well as a large deficit in the UK balance of payments account.

Uncertainty about the Bank of England’s next step persists. Meanwhile, the British Pound and FTSE100 futures offer a lot of trading opportunities during the publication of the Bank’s rate decision.

Besides, the Bank of England will release its monetary policy report, providing an assessment of the economic outlook and inflation. Volatility in the British pound may grow sharply during this period. Apart from GDP, the UK inflation rate is one of the primary indicators for the Bank of England’s monetary policy stance. A soft tone of the report will likely boost the British stock market but cause the British pound to weaken. Conversely, the report’s hawkish tone regarding inflation, implying an interest rate hike, will strengthen the pound.

18:05 – CAD: Bank of Canada Governor Tiff Macklem’s Speech

The Canadian economy, like the global economy, is slowing down, and the situation is rapidly shifting for the worse. It will be interesting to hear Macklem’s perspective on Canada’s economic outlook and the central bank’s monetary policy amid falling inflation.

If Tiff Macklem mentions the Bank of Canada’s monetary policy, the volatility in the Canadian dollar will grow sharply. A signal of monetary policy tightening will bolster the Canadian dollar. Conversely, an intent to ease monetary policy will have a negative impact on the currency.

Additionally, Tiff Macklem will likely clarify the Bank of Canada’s recent interest rate decision and provide guidance for investors ahead of the central bank’s upcoming meeting.

Friday, March 21

There are no important macro statistics scheduled to be released.

Price chart of GBPUSD in real time mode

• Economists expect a slight slowdown in both overall and core CPI.
• Tariffs and potential future universal tariffs are a key concern, adding to price pressures and raising fears of stagflation and a possible recession.
• The US Dollar Index is currently struggling technically, with the 14-period RSI in oversold territory.

Most Read: Dow Jones (DJIA), S&P 500 Under Pressure as Record Cash Levels Suggest More Downside Ahead

US CPI inflation data will be released on Wednesday March 12 at 12h30 GMT time. Markets are paying close attention to the release as it may offer insights into the trajectory of inflation amid an economy balancing persistent price pressures and emerging signs of a slowdown.

What are Markets Expecting from the CPI Data?

Economists expect February’s overall CPI to go up by 0.3% compared to last month, slowing down from January’s 0.5% increase. This slowdown would bring yearly inflation down to 2.9% from January’s 3.0%, marking the first time it has dropped below 3% since early 2023.

For core CPI, which leaves out food and energy prices, forecasts also point to a 0.3% monthly rise. Annually, core inflation is expected to slightly ease to 3.1% from 3.3% in January.

While this suggests inflation might be slowing, there are mixed signals in the economy. Wages are growing faster than expected, but costs for services are coming down, and demand in some key industries is weakening. This creates an unclear picture for where inflation is headed while inflation expectations have shown significant increases off late. 

For all market-moving economic releases and events, see the MarketPulse Economic Calendar.

A Market at a Crossroad – Why This CPI Print Matters

Inflation trends are important for Federal Reserve decisions and financial markets. The Fed is focused on bringing inflation down to its 2% target, but unexpected changes in recent economic data have made things more uncertain. Recessionary fears have also muddied the outlook on Fed rate policy moving forward. 

Markets are keeping a close eye to see if inflation will keep slowing or start rising again as tariffs are now playing a key role. 

The imposition of tariffs on imports from Canada, Mexico, and China has raised concerns about future price pressures. These tariffs could add to goods inflation as businesses pass higher costs on to consumers. 

There have also been warnings from President Trump that universal tariffs are still scheduled to come into effect on April 2, 2025. This would add just another layer of intrigue, while at the same time spur on fears of a potential recession.

Stagflation Concerns Loom 

Stagflation, where the economy slows down but prices stay high, presents a tough challenge. If this happens, the Federal Reserve would have fewer options to manage the situation. Economists say that long-lasting tariffs and issues in the job market could make things worse. US data of late has been softer than expected while some companies have issued warnings around prospects for the next 12 months adding to the stagflation narrative.

Potential Market Impact

Looking at the potential scenarios from the CPI release, I have created a table that may help. Now this of course is no guarantee as to how the market may react but rather my take on the potential movements that could materialize.

Source: LSEG, TradingEconomics. Table created by Zain Vawda

The above table provides an insight into what I expect will happen depending on the CPI prints released later in the day. 

My personal expectations are that the data will land quite close to expectations which could lead to some short-term volatility and whipsaw price action before markets settle down. 

Technical Analysis 

US Dollar Index (DXY)

From a technical standpoint, the US Dollar Index has struggled and continues to do so. The index is trading below the levels it did when the US election took place on November 5 2024. 

The only positive for the US Dollar at the moment is that the 14-period RSI is in oversold territory. A sign that a recovery may be around the corner?

However, as we know the RSI could hover in oversold territory for extended periods of time.

The CPI print will definitely stoke some volatility but at present the tariff and geopolitical developments are overshadowing data releases.

Given that there is the possibility that any move may prove short-lived as tariff developments and comments are coming through thick and fast.

Immediate resistance rests at 103.650 and 104.00 before the confluence level at 105.00.

Immediate support rests at 103.170 and 103.00 before the 102.65 and 102165 handle comes into play.

US Dollar Index Daily Chart, March 11, 2025

Source: TradingView (click to enlarge) 

Support

Resistance

Follow Zain on Twitter/X for Additional Market News and Insights @zvawda

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Another day. Another North American session full of tariff related headlines.

The day began with President Trump imposing a 25% tariff on Canadian steel and aluminum imports, set to take effect tomorrow. This was in response to an electricity surcharge announced by Ontario Premier Doug Ford, who also threatened to cut off electricity exports.

Later, U.S. Commerce Secretary Lutnick met with Premier Ford, who appeared to have acted unilaterally. Following discussions, Ford rescinded the electricity surcharge, prompting Trump to withdraw the tariff measures in response.

Additionally, Lutnick and Ford announced plans to meet on Thursday to discuss either a new USMCA agreement or full compliance with the existing deal.

Market Reaction

• Stocks fell initially on the tariff announcement.
• Markets rallied after Ford rescinded the surcharge and Trump walked back the tariffs.
• S&P and Nasdaq turned positive but faced strong selling pressure upon reaching key levels.
• By the close, major indices erased their gains and ended lower as the initial optimism faded.

What we learned is the market still seems reluctant to call it quits on the sellers. Putting it another way rallies in stocks are being sold.

Other major headlines centered on the Ukraine-Russia war and the high-level meeting in Saudi Arabia involving U.S. and Ukrainian officials.

At the meeting, Ukraine presented a ceasefire proposal, which was agreed upon, effectively putting the pressure on Russia. President Trump stated he plans to call Putin this week to gauge his stance and next steps.

Now, the moment of truth approaches:

• Will Putin accept the ceasefire and move toward a peace agreement?
• Or will he resist and derail the diplomatic efforts?

What’s clear is that Trump is pushing for a swift resolution, and Zelenskiy has aligned with the peace efforts. The question remains: Will Putin follow suit?

IN the US debt market today, yields moved higher with:

• 2 year at 3.949%, up 5.3 basis points
• 5 year at 4.036%, up 6.3 basis points
• 10 year at 4.281%, up 6.9 basis points
• 30 year 4.596%, up 5.9 basis points

In the US stock market, indices closed lower:

• Dow fell -478.23 points or -1.14%.At session highs the index was still down by -43.44 points.At session lows the index was down -736.34 points.
• S&P fell -42.49 points or -0.76%. At session highs the index was up 21.74 points. At session lows the index was down -86.15 points
• Nasdaq fell -32.23 points or -0.18%. At session highs around an hour from the close the index was up 219.07 points. At session lows the index was down -230 points.

In the Forex,

• EURUSD: The EURUSD continued the stretch t a new high going back to October 11 and into a swing area target between 1.0936 to 1.0954. The price stalled within that area and has will have 1.0900 as close support into the new trading day.
• USDCAD. The USDCAD traded sharply higher on the increased tariffs, Then gave back all the gains and moved lower between the 100 and 200 hour MAs between 1.4370 to 1.43916. The price is trading back above those level into the close near 144.27.A swing area above between 1.4448 and 1.4471 is resistence into the new day. On the downside, the 100/200 hour MAs area support between 1.4370 to 1.4404.

The GBPUSD trading higher today and is trading above the 61.8% of the move down from the September 2025 high at 1.2922. That is close support into the new day. The next major target is 1.3000 followed by 1.3044 to 1.3058. You business to new working
this year