Next Week’s FX Forecast & Events Mar 16, 2020

High volatility will continue

Currency market volatility will remain extremely high during the week with big movements across all pairs. There is, however, a possibility that very sharp moves will ease slightly now that the Fed has cut interest rates very aggressively. 

Coronavirus developments will continue to dominate

Global coronavirus developments will continue to dominate market developments during the week. The number of cases in Europe and the US will continue to increase sharply which will increase global recession fears. There have, however, been some encouraging developments in China and South Korea. Improvements in China’s economic performance would help underpin sentiment towards the global economy.  

Central bank action will be important 

Actions by global central banks will remain important during the week with the possibility of further action, although the bulk of moves has probably now been seen. 

Government actions even more important

The actions of governments in boosting confidence surrounding national economies and supporting demand will have an even more important impact during the week. The combined actions and degree of co-ordination will also be important for confidence in the global economy.

US

Federal Reserve policy meeting will still be important despite the emergency move to cut interest rates on Sunday. Its economic assessment will be important and further measures could be undertaken.

The Fed will release latest economic projections and interest rate forecasts from individual committee members. Chair Powell will also hold a press conference. 

Retail sales data is due on Tuesday, but the impact will be very limited. Two regional business surveys will be released with the New York manufacturing Fed index on Monday and Philadelphia Fed index on Thursday. The data will be watched closely for evidence on the coronavirus impact

UK

The UK labour-market data will be released on Tuesday, but there is likely to be very limited reaction. Comments from the Bank of England will continue to be monitored very closely.

Government announcements on coronavirus measures will also be significant for market sentiment.

Euro-zone

Comments from the ECB will continue to be watched closely. Developments surrounding fiscal policy will be watched very closely during the week and will have a more important impact on market sentiment. 

Resistance to fiscal easing would tend to undermine the Euro as fears over a deep recession will intensify.

International

The Swiss National Bank will hold its quarterly policy meeting on Thursday. The interest rate decision and other potential steps will be important.

The Bank of Japan will also hold its latest monetary policy meeting on Thursday with expectations of further support measures, but no move to cut interest rates further.

Canada will release its latest inflation data on Wednesday.

Australia employment data is due on Thursday with New Zealand GDP data on Thursday local time.

Currency FX Forecast for Next Week

Currency pair Spot  1-week forecast 1-month forecast
EUR/USD 1.119 1.130 1.150
USD/JPY 106.8 107.5 103.0
EUR/GBP 0.901 0.900 0.880
GBP/EUR 1.110 1.111 1.136
GBP/USD 1.242 1.256 1.307
AUD/USD 0.625 0.640 0.665
USD/CAD 1.374 1.370 1.360
USD/SGD 1.408 1.400 1.390
USD/HKD 7.770 7.790 7.790
NZD/USD 0.612 0.620 0.630
GBP/JPY 132.6 134.9 134.6
GBP/AUD 1.987 1.962 1.965
GBP/NZD 2.029 2.025 2.074
GBP/SGD 1.748 1.758 1.816
GBP/HKD 9.965 9.78 10.18
GBP/CHF 1.174 1.178 1.216

Tim Clayton

Tim Clayton is a market analyst with more than 20 years of experience in the financial markets, with particular focus on currencies. Holds an economics degree from University of New York. Writes for multiple publications including Investing.com and SeekingAlpha so he is on top of all the happening in the world of currencies and macro-economics.

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