Focus on Banks' Meeting and NFP

RBA Interest Rate Decision

March 7, 05:30 GMT+2.

The Reserve Bank of Australia will publish the monetary policy statement and announce the interest rate on March 7 at 05:30 GMT+2.

The rate is expected at 3.6% level (+35 basis points). According to the RBA rate tracker the probability of increasing the rate by 35 points is 75%. The inflation in Australia is quite high (at 7.4% level) while the yield curve is still not inverted. It is also vital that the US Fed will probably continue monetary tightening. The US takes 11% of the Australian import for 2022. Australia is a net importer. It means that it’s quite unprofitable for the country to devaluate its currency against the US dollar. We may expect that RBA will continue to hike the rate.

The AUD will strengthen if the bank makes a bigger-than-expected rate hike or hints at more tightening.
Otherwise, the AUD will go lower.

Instruments to trade: AUDUSD, AUDJPY, AUDCHF.

BOC Interest Rate Decision

March 8, 17:00 GMT+2.

The Bank of Canada will make the monetary policy decision, which includes an update on interest rates on March 8 at 17:00 GMT+2.

Last time, the rate was hiked by 25 points till 4.5%. Canada has one of the highest key rate levels among the developed economies. On the other hand, the inflation in Canada was at 5.9% in January - lower than in other countries. Core CPI in January was lower than expected (+5.9% against the forecast 6.1%). As a result, the market waits for BOC to pause and not change the rate. Meanwhile, Canada’s labor market situation is slightly worse than in the US. The unemployment rate in January reached the July 2022 level (+5%). The CAD reaction depends on verbal interventions.

If the bank doesn’t give a hint about further tightening – CAD will fall.
Otherwise, the CAD will go higher.

Instruments to trade: USDCAD, CADJPY, EURCAD.

US Unemployment Rate

March 10, 15:30 GMT+2.

The US Bureau of Labor Statistics will release the Unemployment Rate and the Nonfarm Payrolls data on March 10 at 15:30 GMT+2. These are the percentage of unemployed people in the US and the number of people employed during the previous month excluding the farming industry.

Last time, the unemployment rate was released at its historical low +3.4%. Economists expected +3.6%. The lower the rate – the stronger the labor market. It gives the US Fed room for further monetary tightening. In February, economists expect that the unemployment rate will be +3.5%. This is quite reasonable, considering the rising of the Initial Jobless Claims for the previous month.

If the release is better than the forecasts (less than 3.5%), the USD will rise.
If the release is weaker than the forecasts (more than 3.5%), the USD will fall.

Instruments to trade: EURUSD, USDCAD, USDJPY

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