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Next week’s Forex forecast

Sergiy Zlyvko
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Next performance of Yellen reiterated the mood of new head of the Federal Reserve to continue quantitative easing folding. At the same time, she noted that, despite the fact that there is no risk of bubbles, but long-term policy of soft rates can cause them to appear. In light of this statement meeting of the Federal Open Market Committee becomes even more interesting, which will take place on 18-19 March. But until the market will be caused for excitement as the next week is full of macroeconomic statistics. In addition, the Central Bank will announce its 4 decisions on monetary policy.

Next week the statistics from the U.S. will have a key influence on the dynamics of the pair, the crown of which will be the data on payroll employment Non-Farm Payrolls (NFP) on Friday, March 7. But before that the data on business activity in the manufacturing sector (March 3) and, more importantly, the service sector, as well as the employment report from ADP (March 5) will be published. Despite the fact that after approaching the target level of 6.5% at the moment unemployment is no longer seen as an indicator of the Fed rate hike since the beginning, the indicator still does not lose its significance. Thus, strong economic data from overseas may support the dollar, since it would hope to accelerate folding quantitative easing measures. Also Fed attitude possibly can be understood from the statements of its representatives (Dudley, Plosser, Fisher and Lockhart) on March 6.

The ECB meeting on March 6 will be the key event for the pair. Recent reports give reason to hope that the regulator will not carry out monetary policy easing. Of course, many events will depend on the comments that on the press conference Mario Draghi will make. Insufficient soft mood of central bank head would be a good support for the euro, allowing him to make attempts to further growth. In addition we should not forget about the macroeconomic statistics, because it can influence the decisions made by the regulator. During the week Eurozone is going to publish the data on business activity in the manufacturing sector and services in February. Also GDP data for the 4th quarter and retail sales (March 5) are noteworthy.

British calendar is saturated also. Data on business activity in the industrial and construction sectors as well as in the service sector (respectively on 3, 4 and 5 March) will be published. At the same time, the growth indicators can further enhance the British pound as all this will confirm the recovery of the national economy, which will allow the Bank of England in excess of inflation to the target level for the rate increase. As for the MPC meeting on March 6, we do not expect the changes in monetary policy. Traditionally some specific comments will not be done. Therefore pound is unlikely to demonstrate an active response.

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