Markets Steady as Federal Reserve and Bank of England Decisions Awaited

Pound News: Sterling Jumps Ahead of Central Bank News but Gains Limited

The Pound saw a sharp slump yesterday over concerns that several European countries have suspended the use of the AstraZeneca vaccine that the UK has widely used in its vaccination programme so far.

But Sterling quickly recovered later in the day after the European Medicines Agency (EMA) said there is no indication that the vaccine is linked to blood clots.

GBP exchange rates are advancing today, with investors buying the Pound on UK economic optimism ahead of key central bank decisions later in the week.

Sterling’s gains could be limited, however, if the Bank of England (BoE) is more dovish than expected in tomorrow’s decision, or if UK-EU Brexit tensions worsen, which could drive investors to sell the Pound from recent highs.

Euro News: Euro Lacks Drive as UK and US Central Banks in Focus

The Euro has lacked much in the way of solid support or drive in recent sessions. With much uncertainty persisting in the Eurozone’s coronavirus outlook, the shared currency has little reason to sustain gains, keeping it near recent lows against both the Pound and US Dollar.

Key Eurozone data due tomorrow includes trade balance data., while an upcoming speech from European Central Bank (ECB) President Christine Lagarde could also cause some Euro movement if it surprises investors.

US Dollar News: USD Steadies as Markets Await Federal Reserve

Tonight will see the Federal Reserve hold its March policy decision. Amid speculation that the bank could be pressured by inflation to become more hawkish, the US Dollar has been trending strongly over the past week or so.

However, analysts believe the Fed will downplay any chances of tighter monetary policy, which if the Fed pours cold water on speculation, the US Dollar could weaken.

Canadian Dollar News: Surging CAD Remains Appealing despite Oil Price Drop

A slip in prices of oil, Canada’s biggest export, have not stopped the Canadian Dollar’s rally over the past week. Today, investors surprised by the CAD rally adjusted their positions and bought the Canadian currency ahead of the highly anticipated Federal Reserve decision.

Canada’s February ADP employment change report will be published tomorrow. If this and Friday’s Canadian retail sales results beat forecasts, they could keep the Canadian Dollar highly appealing.

Australian Dollar News: Investors Steady on ‘Aussie’ Ahead of Federal Reserve

The Australian Dollar, which has been weak in recent sessions, saw steadier movement today. Investors are hesitant to make big moves on the risk and trade-correlated currency ahead of tonight’s Federal Reserve policy decision.

If the Fed takes a more dovish tone on monetary policy, the market risk-on sentiment could resume and this would boost Australian Dollar appeal.

Upcoming Data

Thursday 18th March

00:30    Australian Job Market Report

08:00    ECB President Lagarde Speech

10:00    Eurozone Trade Balance

12:00    Bank of England (BoE) Policy Decision

12:30    Canadian ADP Employment Change

12:30    US Jobless Claims