06.03.23 - 10.03.22
Results of the previous week
US indices were mostly under pressure over the past week. Higher-than-expected economic data is leading Fed officials to start talking about further rate hikes. Against this background, there were fears that the Fed would raise the interest rate by 0.5% at its March meeting, which is negatively affecting indices.
Expectations of a more decisive rate hike provided moderate support for the dollar, which strengthened against the euro, pound and commodity currencies early in the week. It hardly came as a surprise since Fed Chairman Jerome Powell, speaking to the Senate Banking Committee on 7 and 8 March, said that the pace of key rate hikes could accelerate.
Brent crude oil is moving to the lower line of the limited range between $77.80 and $88.00. Powell's hawkish mood has negatively affected the commodity's prices, and traders fear that tightening monetary policy will send the US into a recession, leading to lower demand for oil.
Key events of the current week
The US. Inflation rate
According to the latest data, price pressures in the US are gradually retreating from all-time highs. This is largely due to the US Federal Reserve's rate hikes. Given the regulator's readiness to continue raising rates longer than expected, price pressure indicators remain the key ones to look at. Inflation is expected to slow down to 6.2% in annualised terms, and considering that the US economy is feeling reasonably strong so far, such figures could indicate that the Fed will continue to tighten its monetary policy. As such, US indices could weaken in the short term amidst these developments. In this scenario,the S&P 500 (ES) could continue moving to around 3800.00.
The US. Retail sales
A month earlier, US domestic consumption increased. The latest data reflected the highest weekly increase in new unemployment claims since the start of the year. It raises concerns about the prospects for the US retail sector. The indicator is expected to drop by 0.3% compared to the previous month's data. For a services-based economy, this is a negative sign. This would put the greenback under pressure, which would lead to its main opponents showing short-term strengthening. For example, GBP/USD may aim to return to 1.2180.
ECB. Interest rate decision
Inflation in the eurozone has been falling for the past six months, but price pressure remains significantly higher than the target level set by the ECB. This means that the regulator will once again have to find a compromise between trying to keep the economy from sliding into a recession and trying to curb inflation. It has already taken unprecedented measures to slow down inflation. The rate has been at its all-time high since November 2008, and it's expected to be hiked by another 0.5% at the ECB's upcoming meeting. If the regulator tightens its monetary policy, it would provide short-term support for the euro. In this scenario, the EURUSD could rise to 1.0800.