Last Week: What Moved Markets
🇺🇸 US Dollar: Trump’s Policies Drive Volatility
● Nasdaq down 4%, S&P 500 down 2.7% amid economic slowdown fears.
● Trump’s tariffs trigger a global sell-off, with EU retaliation (€26bn).
● Dollar weakness persists on US recession concerns and a forecasted 2.8% Q1 contraction.
🇨🇦 CAD: Strengthens on Carney Optimism
● CAD rises on Mark Carney’s leadership as Liberal party leader.
● USD/CAD options signal potential for further gains amid falling US yields and eroding short positions.
● Political shifts and US economic uncertainty drive CAD’s stronger outlook.
🇪🇺 Euro: Gains Fizzled Amid Uncertainty
● Euro rises sharply on optimism over Germany’s defense spending plan.
● DAX Index up 14%, boosting Euro strength against the Dollar and Pound.
● Germany’s fiscal reforms face uncertainty, and Putin’s stance on Ukraine weighs on the currency.
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This Week – What to Watch
🇺🇸 Tariffs Take Centre Stage Amid US Dollar Volatility
● Tariff uncertainty: Trump’s 50% steel/aluminium tariff on Canada and EU retaliation stirs market concerns ahead of the April 2 deadline.
● Market reaction: US dollar shows mixed performance; investors shift focus from inflation to economic growth risks.
● Fed expectations: Growing speculation for 72bps worth of rate cuts in 2025, up from 50bps projected in December.
🇺🇸 FOMC Decision: Focus on Economic Projections and Rate Expectations
● FOMC meeting Wednesday: Attention on the updated “dot plot” and potential revisions to rate expectations for 2025.
● GDP projections: Atlanta Fed forecasts 2.4% qoq contraction for Q1; weaker retail sales could prompt further rate cut speculation.
● Market response: Lower rate expectations could extend US dollar slide and pressure equities amid recession concerns.
🇬🇧 BoE Decision: Will the Bank Take a Hawkish or Dovish Stance?
● BoE meeting upcoming: No action expected, but recent economic data suggests only two more rate cuts for 2025.
● Key drivers: Catherine Mann’s shift to advocate for a 50 bps cut and concerns over Trump’s tariffs.
● Market reaction: A dovish tone could weaken the pound, while a focus on inflation risks could support gains.
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Key Events This Week
Monday 17th march
00:30 US Core Retail Sales
Tuesday 18th March
00:30 Canadian CPI
Wednesday 19th March
18:00 US FOMC Statement
21:30 New Zealand GDP
Thursday 20th March
00:30 Australian Unemployment Rate
07:00 UK Claimant Count Change
08:30 Swiss Policy Rate
12:00 UK Bank Rate
12:30 US Unemployment Claims
16:50 BOC Gov Macklem Speaks
Friday 21st March
12:30 Canadian Retail Sales
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