Monetary policy isn’t the straightforward fundamental driver it once was. This past week, the Dollar struggled despite strong NFPs and a certainty of a FOMC hike while the Euro rallied after reports the ECB discussed the future of hikes. Be prepared for unusual response to the Fed, BoE, BoJ and even SNB decisions ahead.
US Dollar Forecast: Dollar Will Find Less Lift in Next Fed Hike, Policy Promise
Despite a remarkably robust set of economic data – that included strong February payrolls – and a rise in rate expectations to the point of certainty that the Fed will hike Wednesday, the Dollar lost ground this past week.
Euro Forecast: ECB Hawkish Twist, Macron’s Improving Odds Giving Euro a Lift
With the European Central Bank feeling more optimistic in the region’s progress and the odds of the National Front’s Marine Le Pen winning the French presidential election fading (thanks to a resurgent Emmanuel Macron), obstacles to further Euro strength appear to be fading quickly.
British Pound Forecast: British Pound Bogged Down By Brexit and Fears of Economic Weakness
The British Pound closed out the week dropping for a sixth day versus the Euro, its worse run since August, and had a second straight week of declines against the Greenback. This coming week, the BOE is unlikely to back away from its ultra-accommodative policy stance.
Japanese Yen Forecast: Narrowing Fed Interest Rate Forecast to Curb Bullish USD/JPY Outlook
USD/JPY stands at risk of facing increased volatility over the coming week as the Federal Open Market Committee (FOMC) is widely expected to deliver a March rate-hike, while the Bank of Japan (BoJ) continues to pursue its Quantitative/Qualitative Easing (QQE) Program with Yield-Curve Control.
Australian Dollar Forecast: Australian Dollar Likely To Struggle if Fed Delivers
The Australian Dollar seems likely to continue lower if US interest rates rise this week, but the prevalent idea that Australian rates won’t rise this year faces new challenges.
