The Fed is ready to start tapering in November. Since the markets were expecting this and it wasn’t a surprise, the USD slumped allowing risk-on currencies and gold to rally up.
Important events on March 2-6
Will the pandemic be confirmed?
After the heavy selloff last week amid the coronavirus fears, next week is going to be interesting to look at. As the number of cases around the world continues rising, investors keep selling the risky assets and buying safe-havens such as the Japanese yen. We may expect more news, more cases and, probably, more damage to the markets. In case of lighter data, the risk sentiment will recover.
Reserve bank of Australia will publish the statement
The Reserve bank of Australia will release its rate statement on March 3 at 5:30 MT time. The market expects the bank to keep its interest rate on hold at 0.75%. At the same time, it may acknowledge the risks from the coronavirus, which directly hurt its main trade partner – China, and has been already spread globally. If the bank provides a dovish outlook, the Australian dollar will fall to the lows of the 2008 crisis. In case of an alternative scenario, the AUD will strengthen.
Will we see a rate cut by the Bank of Canada?
The Bank of Canada will be the second major central bank to conduct a meeting next week. The meeting is expected on Wednesday at 17:00 MT time. Coronavirus made the overnight index swaps market pricing in a 61% chance of a rate cut. At the moment, the interest rate is held at 1.75%. The rate cut will make the Canadian dollar vulnerable to a further fall. Let’s not forget that the commodity-linked currency is affected by the coronavirus fears and the weakening of the oil prices. On the other hand, hawkish comments will push the Canadian dollar up.
The United States will release the level of non-farm employment change alongside with average hourly earnings and an unemployment rate on Friday at 15:30 MT time. The forecasts are optimistic: analysts anticipate the NFP to advance by 185K, average hourly earnings to increase by 0.3%, and the unemployment change to reach 3.5% - down from the 3.6% previously. Better-than-expected figures will push the US dollar higher.
OPEC urgent meeting
Next Thursday the countries of OPEC will hold an extraordinary meeting in Vienna. They will decide on further cuts of oil output amid the weak oil prices.
US Retail Sales will be out on October 15 at 15:30 MetaTrader time (GMT+3).
Australia will release employment change and an unemployment rate on Thursday, October 14, at 03:30 MT (GMT+3).
The US dollar is heading to close the seventh day in the red as it remains under selling pressure. The US data at 15:30 GMT+3 (jobless claims and Philly Fed Manufacturing Index) may support the greenback if it's strong.
Canada will publish the Retail Sales and Core Retail Sales on October 22, at 15:30 MT time (GMT+3).
The United States will release the weekly Unemployment Claims on October 21, at 15:30 MT time (GMT+3).