Weekly trading forecast March 25 - 29.

Negative weekend gaps are possible for a wide variety of financial instruments in the upcoming week as Asian investors did not absorb all of the events happened last Friday. The most vulnerable assets are Asian stock indices and such currency pairs as EUR/JPY, NZD/USD and AUD/USD. High-risk assets and emerging markets could be hit the hardest if the fear/greed barometer shifted to left side dramatically on the back of concerns for the global economic growth as the European Union is already facing an upcoming recession, according to the latest macroeconomic data. Although major central banks already made interest rates decisions and announced monetary policy prospects for the nearest future, financial conditions might be in the market’s focus again as the recent development might have a huge impact on additional stimulative measures by major global regulators. The only lagging central bank is the Reserve Bank of New Zealand which will meet this week for the rate decision. The economic calendar is full of important events and reports in many regions across the globe, so the volatility might stay at the same high level if not accelerate. GDP revisions, consumer confidence data and inflation updates will be in the focus, while several officials will speak in order to calm down the crowd. Traditional periodic reports will show the situation in commodities demand, affecting the price action for industrial metals and crude oil. And of course, the geopolitics will have the usual impact on traders’ sentiment, especially in terms of the Brexit saga.

Monday, March 25.

The Bank of Japan Board Member Harada will be the first person to talk about what’s happening in the financial markets and what investors should expect from the Japanese regulator. As long as the Japanese Yen keeps strengthening, which hurts local exporters, BoJ might start verbal interventions on Monday. There were rumours in the market about potential soft measures by the Bank of Japan and additional liquidity to be injected into the financial sector, so USD/JPY will be extremely vulnerable to whipsaws and shadows on daily charts in the Asian trading session. German Ifo institute will publish the economic survey, business sentiment and expectations at 09:00 AM GMT. That event will be important in the light of the latest disappointment from EU PMI reports last Friday. The headline figure was noticed at the level of 98.5 points in February, and if the data failed to meet the market expectations, or if it worsened further, then we could see another round of sell-off in all euro pairs including EUR/USD, EUR/JPY and EUR/GBP. British inflation expectations report is tentative and it could be ignored by Sterling traders as all eyes will be on Theresa May and the British Parliament in the scope of Brexit developments. The US economic calendar is almost empty, while traders will listen to FOMC member Harker and Chicago Fed President Evans. The US dollar index might continue strenghtening across the board.

Tuesday, March 26.

The Reserve Bank of Australia Assistant Governor Ellis will speak early Tuesday, while New Zealand reports will be crucial in the light of the upcoming rate decision by RBNZ later this week. The trade balance will be published and expectations are quite soft so far. NZD/USD is vulnerable to the selling pressure if the data missed the consensus. The Japanese economy will publish Tokyo Core CPI, Corporate Services Price Index and BoJ summary of opinions. All of those events would have a direct impact on yen crosses. German GFK Consumer Climate is forecasted to come in line with the previous figure in April, while a pessimistic surprise is possible given the PMI crash last week. French Business Survey and national GDP will be released later on Tuesday. Sterling traders will look for an improvement in Mortgage Approvals in the UK in March. On the other side of the Atlantic, investors will watch the US Building Permits report, the Redbook survey and House Price Index right before the opening bell. But the main report will be released later. CB Consumer Confidence is supposed to drive the price action in US stock indices and the US dollar index as Federal Reserve Chairman Powell stated last week that the monetary policy becomes much more data-dependent as it was previously. Consumer Confidence is expected to grow in March to 132.0 basis points in March, 0.6 basis points higher than in February. If the data was able to beat the economists' expectations, then US equities could get additional support.

Wednesday, March 27.

The Reserve Bank of New Zealand will publish the interest rates decision at 01:00 AM GMT on Wednesday. An ‘unchanged’ verdict is widely anticipated but the economic statement and press conference might cause additional volatility for NZD/USD and NZD/JPY currency pairs. The latest data was not convincing for the Kiwi bulls and chances for a hawkish statement are quite low. So, we could see the New Zealand dollar under heavy selling pressure. French PPI and Spanish CPI reports will be published during the European trading session, while currency and equities traders will wait for ECB President Mario Draghi to speak about the monetary policy and economic growth which appeared under the threat of recession. He would try to calm the panic down, announcing further stimulus by the regulator and promising more and more liquidity to pump into the financial sector. But that might cause an opposite reaction and European equities and EUR/USD might accelerate the downfall. The United States will update the trade balance surplus, which is crucial for the Federal Reserve, according to Powell’s comments last Wednesday. So far, analysts expect the negative surplus to narrow to -57.5 billion dollars in February compared to -59.8 billion dollars in January. That could be a supportive factor for the greenback. The Canadian dollar’s price action will be dependant on trade balance as well. Us crude oil inventories report will be published later on Wednesday and analysts expect the headline figure at +0.309 million barrels after a sharp decline of -9.589 million barrels last week. WTI and Brent Crude oil price might face a selling pressure if that confirmed.

Source: EUR/USD

Thursday, March 28.

Thursday’s price action will be dependant on the following reports: Japanese Foreign investments, New Zealand Business Confidence, British Nationwide HPI, Spanish HICP. But the real volatility should spike on EU consumer confidence and German inflation data. The United States economy will update the latest revision of the gross domestic product and fresh housing sector reports. FOMC Members Clarida and Bullard will also speak on Thursday.

Friday, March 29.

Japanese inflation data, unemployment rate, retail sales and industrial production reports will influence USD/JPY. A whole pack of crucial data will be released in the Eurozone: German Retails sales and unemployment rate, Frech consumer spending and CPI inflation, Spanish GDP and retail sales. But the headline event is EU CPI. If the data was softer-than-expected, EUR/USD could easily test 1.1000 psychological round-figure static support level. The British GDP revision will be in the focus of Sterling speculators. Canada will also publish the latest GDP revision, while the US PCE deflator will be in the focus of the greenback traders on the final trading day of the month.
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