This week’s key focus was on the Federal Reserve rate decision and whether there would be a shift in the dot plot. The FOMC median dot plot still sees no US interest rate hikes coming through 2023. This decision supported stocks and other risk positive assets higher in an immediate reaction to the decision. However, four FOMC officials do see a hike in December 2020 and this supported the USD as the decision was digested by the market. Some very strong US seasonal periods were highlighted for Coca-Cola and Amazon this week on our blog which are well worth checking out. The strong seasonal data comes from Seasonax.
Other key events from the past week
- USD: Interest rate, Mar 17: The Federal Reserve kept to a dovish tone on Wednesday and are still not forecasting rate hikes until 2024. However, growth was revised upwards. The initial dovish reaction in the USD was reversed in early European trade on Thursday as the US shows signs of a faster recovery. You can read the Fed’s statement here.
- GBP: Interest rate, Mar 18: The Bank of England kept rates unchanged at 0.10% and votes were 0-0-9. The policy statement was fairly neutral with some positive notes, but no near term interest rate hikes are expected from the UK de-spite the fast vaccine roll out with nearly 2/5 of all UK citizens vaccinated.
- CAD: CPI data, Mar 17: The Bank of Canada was cautiously optimistic at their last interest rate meeting. However, weaker than expected inflation readings this week have pushed back expectations of immediate bond tapering from the Bank of Canada which limited further CAD upside on Wednesday.
Key events for the coming week
- EUR: PMI data, Mar 24: Europe is currently behind the US in its vaccination program and weak PMI readings will further open up a recovery gap between the US and the Eurozone potentially supporting EURUSD sellers.
- CHF: Interest rate, Mar 25: The Swiss National Bank has the lowest interest rates of all the major central banks. No changes are expected this week to the very low -0.75% base rate.
- USD: US 10 y, Mar 26: US 10 year yields will remain in key focus this week. If the yields start rising higher remember that the 2.00% level is key. If yields do rise to that level the question is how much negative impact will this have on global stocks?