Forex News – Weekly review: Fed meeting was highlight of the week, underpins dollar
March 21, 2014 10:15 am
The climax of the week was without a doubt the Federal Reserve policy meeting as well as Fed Chair Janet Yellen’s press conference. As was widely expected the Federal Reserve Open Market Committee (FOMC) announced its decision to maintain its scaling back of monthly bond buying by a further $US10 billion a month to bring the total stimulus down to $US 55 billion a month. What came as surprise to markets was Yellen’s implication that the Fed will begin to hike interest rates sooner than previously thought.
The dollar was sent higher as a result while equities were sold-off. The dollar jumped by over 1 percent against the yen after the event to reclaim the 102.00 level. The euro lost its 1.39 handle against the dollar and fell to a two-week low to the mid-1.37 level while sterling also fell to a one-week low below the 1.65 level.
Earlier in the week there were key data releases from the UK and the Eurozone. German ZEW economic sentiment data on Tuesday showed that investor confidence fell to the lowest since August, coming in below expectations at 46.6 in March versus 55.7 in February. This dented the euro since Germany is the Eurozone’s largest economy.
The UK released some strong jobs data on Wednesday. The claimant count change indicated fewer Britons claimed unemployment benefits in February and by much fewer people than expected. The data helped support the pound against the dollar and the euro, although it fell after the FOMC.
Next week’s economic calendar is relatively light, although there will be some important PMI data from various countries.
On Monday focus will be on data from China. The flash HSBC Flash Manufacturing PMI will be closely watched since China is the world’s second largest economy and recent data have suggested there has been a growth slowdown there, which could impact general risk appetite. The falling yuan has attracted market attention as it touched 13-month lows on Friday.
Flash PMI data from the Eurozone for the manufacturing and the services sector are also scheduled for release on Monday, which will be a key event for the euro.
On Tuesday the spotlight will be on a report on German Ifo Business Climate. This will be closely watched especially after last week’s disappointing German ZEW report. This is another key risk event for the euro since Germany is deemed to be Europe’s powerhouse.
Other data on Tuesday includes UK inflation and US New Home Sales.
Wednesday’s data will announce US Durable Goods Orders.
On Thursday, UK Retail Sales and US Pending Home Sales will be released.
Friday is relatively quiet, with the main focus being on the UK current account data.
Geopolitical tensions surrounding Crimea took a back seat this week although markets are keeping an eye on any new developments and on any further sanctions to be taken against Russia by the West.
The climax of the week was without a doubt the Federal Reserve policy meeting as well as Fed Chair Janet Yellen’s press conference. As was widely expected the Federal Reserve Open Market Committee (FOMC) announced its decision to maintain its scaling back of monthly bond buying by a further $US10 billion a month to bring the total stimulus down to $US 55 billion a month. What came as surprise to markets was Yellen’s implication that the Fed will begin to hike interest rates sooner than previously thought.
The dollar was sent higher as a result while equities were sold-off. The dollar jumped by over 1 percent against the yen after the event to reclaim the 102.00 level. The euro lost its 1.39 handle against the dollar and fell to a two-week low to the mid-1.37 level while sterling also fell to a one-week low below the 1.65 level.
Earlier in the week there were key data releases from the UK and the Eurozone. German ZEW economic sentiment data on Tuesday showed that investor confidence fell to the lowest since August, coming in below expectations at 46.6 in March versus 55.7 in February. This dented the euro since Germany is the Eurozone’s largest economy.
The UK released some strong jobs data on Wednesday. The claimant count change indicated fewer Britons claimed unemployment benefits in February and by much fewer people than expected. The data helped support the pound against the dollar and the euro, although it fell after the FOMC.
Next week’s economic calendar is relatively light, although there will be some important PMI data from various countries.
On Monday focus will be on data from China. The flash HSBC Flash Manufacturing PMI will be closely watched since China is the world’s second largest economy and recent data have suggested there has been a growth slowdown there, which could impact general risk appetite. The falling yuan has attracted market attention as it touched 13-month lows on Friday.
Flash PMI data from the Eurozone for the manufacturing and the services sector are also scheduled for release on Monday, which will be a key event for the euro.
On Tuesday the spotlight will be on a report on German Ifo Business Climate. This will be closely watched especially after last week’s disappointing German ZEW report. This is another key risk event for the euro since Germany is deemed to be Europe’s powerhouse.
Other data on Tuesday includes UK inflation and US New Home Sales.
Wednesday’s data will announce US Durable Goods Orders.
On Thursday, UK Retail Sales and US Pending Home Sales will be released.
Friday is relatively quiet, with the main focus being on the UK current account data.
Geopolitical tensions surrounding Crimea took a back seat this week although markets are keeping an eye on any new developments and on any further sanctions to be taken against Russia by the West.
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