The earnings season in the United States is still on. This means that stocks of the largest American companies will likely make big moves.
Weekly outlook for March 18-22: which events to trade?
A good trader should be prepared for the events which are likely to shake the market. These events can be found in the economic calendar. They offer exciting opportunities to get profit.
Tuesday, March 19
The UK parliament will vote on Prime Minister Theresa May’s Brexit deal for the third time. Last week British lawmakers voted against leaving the EU without a deal and supported a delay to the March 29 exit date.
UPDATE. The speaker of Britain’s parliament said Prime Minister Theresa May’s Brexit deal could not be voted on again unless a different proposal was submitted, so it seems that the delay of Brexit is now the main option.
The market seems optimistic. Traders mostly believe that a no-deal Brexit will really be averted. Either the British parliament approves the plan of the Prime Minister Theresa May or Brexit itself is postponed for more than a year. The first option will cause a powerful short-term spike up in the pound. The second one will make things more difficult.
The EU leaders will meet at the summit on Thursday to discuss Brexit. If the UK parliament rejects May’s plan for the third time, the extension of the Brexit deadline will be the main topic on the agenda. Of course, the uncertainty remains: all 27 EU member states must agree to a request for a Brexit extension and it will be still not clear when and on what terms Britain will leave. As a result, the rejection of May’s plan can hurt the GBP given the fact that the sentiment has become too optimistic.
Instruments to watch: GBP/USD, EUR/GBP, GBP/JPY
Wednesday, March 20
The US central bank, the Federal Reserve, will meet to set monetary policy. The federal funds rate, the statement and the economic projections will be released at 20:00 MT time. The Fed’s Chair Jerome Powell will hold a press conference at 20:30 MT time.
During the recent weeks, the Fed has conveyed its position clearly enough: the central bank is in no hurry to raise interest rates. The updated forecasts of the regulator will likely include the expectations of fewer interest rate hikes and slower economic growth. At the same time, it’s necessary to remember that wage growth is at its highest level seen in decades and the labor market is producing the lowest unemployment rate in nearly 50 years. So traders may have overly dovish expectations. The USD will likely trade on the back foot before the meeting but has a chance to recover afterward.
Instruments to watch: EUR/USD, USD/JPY, gold
Thursday, March 22
New Zealand will release economic growth for Q4. In Q3, the country’s GDP rose by only 0.3% slowing down from the 1% q/q growth in Q2.
According to expectations, the figures can come out on the weaker side as other countries have printed slow growth figures. The consensus forecast is a 0.6% increase in GDP, while the Reserve Bank of New Zealand predicted a 0.8% growth. The main problems include soft manufacturing activity and worse numbers in the labor market.
If the actual reading of New Zealand’s GDP actually disappoints, traders will start thinking that the RBNZ policy should be more accommodative. This will have a negative impact on the NZD.
Instruments to watch: NZD/USD, AUD/NZD, NZD/JPY
The Bank of England will publish the results of its meeting at 14:00 MT time.
The priced-in possibility that the BoE will raise interest rates by December rose last week from 30% to 40%. Inflation figures might be solid enough for British central bank to think about raising rates in the foreseeable future. However, Governor Mark Carney will have his hands tied until there’s some certainty about Brexit. As a result, we don’t expect the regulator to sound optimistic. That’s why the potential for the pound’s advance on this event is limited.
Instruments to watch: GBP/USD, EUR/GBP
Friday, March 22
The key economies of the euro area will release Purchasing Managers Indexes at 10:15-11:00 MT time.
So far, the economic picture for the region was rather bleak. Even the ECB has acknowledged it at the latest meeting. German manufacturing sector got hit especially hard. The nation's manufacturing PMI is below the critical 50-point level. Although it may increase, it’s not likely to return above 50 this time.
Nevertheless, you can see that the euro hasn't been that sensitive to the data out of the eurozone in recent weeks and managed to stay afloat versus the USD. Much will depend on the US side of things, but we can assume that unless the European PMIs bring a very big negative surprise, the euro will quickly adapt to the situation and stay supported.
Instruments to watch: EUR/USD, EUR/GBP, EUR/CAD, EUR/AUD
Will the new ECB president continue the monetary policy of Mario Draghi or there will be a new direction? We discuss what changes Christine Lagarde may bring to the Eurozone and how it may affect the euro.
Walt Disney will release its financial results on Thursday, November 7. Let’s have a look at the fundamental and technical picture for this stock.
GBP/USD has been consolidating between 1.30 and 1.2770 for the past month. The pair met resistance at the resistance line connecting October and November highs.
AUD/JPY has reached the support line connecting August and October lows in the 73.30 area. What's next?
The USD started the day dropping against the Canadian dollar, now on a bullish reversal.