Week of 11 MARCH

Central banks assumed primacy last week, with the ECB holding rates unchanged and Fed Chair Jerome Powell hinting at rate cuts. In the week ahead, attention will centre on the US CPI and various economic indicators emanating from the UK, including employment and GDP figures.​

Week in Review

Last week's major central bank meetings showed policymakers sticking closely to their scripts.

The Fed Powell's semiannual testimony to Congress reaffirmed that interest rate cuts are expected, though not imminently. Markets responded positively to his remarks, with indices rising despite no new policy signals.

The ECB kept interest rates on hold, as widely expected. However, it revised its growth and inflation projections for the year down, implying readiness to cut rates in June along with the Fed. Eurodollar closed the week on a positive footing, leaving behind support at $1.087 for an attempt at $1.10.

The BOC also kept rates on hold as expected, but comments pointing to inflation remaining below target through year-end boosted the Canadian dollar. USDCAD has formed a solid resistance of $1.36, opening the door to $1.34 and the swing support of $1.3356.

US labour market data signalled a tighter environment, with the JOLTS Survey increasing and the ADP showing job changers' pay increases for the first time since November 2022.

UK Chancellor Jeremy Hunt's Spring Budget offered modest tax reductions as expected. Moreover, the UK's OBR forecasted inflation to return to the BOE's 2% target "within a few months".

China's annual National People's Congress set GDP growth "around 5%" without surprises. According to economic data, export growth has more than doubled forecasts and boosted China's trade surplus.

US Services PMI disappointed and Treasury yields declined throughout the week, reaching their lowest level in a month. In addition, Durable Goods orders contracted slightly more than anticipated.

Australian GDP matched projections, with Treasurer Jim Chalmers saying growth will prove weak over 2024.​

Biggest Market Movers

• Gold reached a new all-time high in reaction to Powell's remarks about potential rate cuts as early as June, coupled with optimism over monetary easing.
• Bitcoin surpassed its previous record high against a backdrop of dollar weakness and anticipation surrounding the digital asset's halving event in April.
• The Japanese Yen soared versus the dollar, pushing USDJPY below 149 as speculation intensified that the BOJ may soon adjust its yield curve control policy to permit hiking.

Top Events in the Week Ahead

The coming week is relatively quiet on the major data front, given the absence of central bank meetings from major economies and the Fed entering the blackout period.

Will US Core Confirm The Slowdown?

Chief among the potentially market-moving indicators is the release of US inflation figures, with the headline CPI expected to remain steady at 3.1% and core to slide to 3.7% from 3.9%. The following day, we will see the release of PPI, which is forecast to remain unchanged, suggesting inflation pressures may have stabilised. Then, US retail sales are predicted to rise, consistent with recent data pointing to resilience.

United Kingdom Economic Data

On Tuesday, the UK will publish its latest labour market data, expecting employment growth to continue softening in line with projections that the BOE may soon begin easing. However, average earnings are expected to remain stubbornly at elevated levels. The next day, the UK will report January's GDP, which is anticipated to return to flat growth with the three-month average rebounding into positive. Meanwhile, Manufacturing Production is seen returning to negative growth for the month, along with slower Industrial Production. A busy week for Footsie and Cable is coming up, with the latter heading towards $1.30 should it successfully reclaim $1.2830.

Other Events, Earnings Reports

Monday, we will see the commencement of the Eurogroup meeting. Tuesday includes Australia's NAB Business Confidence survey. EU Industrial Production and the UK's trade figures are scheduled for Wednesday. Thursday has Swiss Producer and Import price releases. For Friday, the University of Michigan Consumer Sentiment is expected.

Earnings anticipated in the coming week include Oracle, Kohl's, Lennar, Dollar Tree, Adobe and Jabil.​