It was Donald Trump’s speech that was expected to move the markets in the previous week. Expectations were high, but after all Trump didn’t say anything that the markets haven’t heard before. The US president Trump offered few details on the substance of his policies on issues ranging from trade, defense, immigration and counterterrorism. So why has the dollar rallied? That’s because of the FED officials who indicated that a rate hike in March is more than possible. Probability of such move rose to 90% from 30% two weeks ago and that gave the dollar a long-awaited support. If the USD trade is about to continue, the upcoming NFP report should confirm that the FED could raise rates on its upcoming meeting.
NFP report: Friday (1:30 pm GMT)
There’s no doubt that the March meeting is live. Even the most dovish members of the Federal Reserve indicated that rates should go up soon. The data published recently has been more than supportive and the upcoming NFP report could be an icing on the cake. The market is almost certain that the FED hikes rates and it’s likely that a print close to a consensus could strengthen such view. However, details of the report, including wages and unemployment rate, will be crucial for market reaction.
Central Bank Meetings: RBA (Tuesday 3:30 am GMT), ECB (Thursday 12:45 pm GMT), Draghi’s press conference (1:30 pm GMT)
Bank of Canada meeting was the first this month resulting in no changes in policy and it’s highly likely that the Reserve Bank of Australia will do the same. That is why the market will focus on the tone of the statement as it may suggest if a move is possible this year. ECB’s meeting could be a different story though. The Bank won’t change it’s policy, but it may send a signal about a future of the QE program beyond 2017 based on the latest macroeconomic projections. The data has been supportive recently but it might be too early for the ECB to play with taper expectations and risk any unwanted EUR appreciation.
UK data: industrial production (Friday, 9:30 am GMT)
The pound was one of the worst performing currencies last week as weaker economic data was added to existing political woes. PMIs from both services and manufacturing disappointed and showed signs of cooling-off in the UK economy. That led to a decline on the GBPUSD which pushed the pair below an important support at 1.2250. If the industrial production data confirms a deterioration of the UK economy, the pound could revisit multi-year lows.