Forex – Weekly Forecast: March 25

Investors will listen to comments from several Fed speakers this week, awaiting developments in the US-China trade talks, and the exit of Britain will remain in the spotlight after European leaders have given two weeks in the United Kingdom to extend its mandate.

Chicago Fed President Charles Evans, Boston Fed President Erik Rosengren, and US Federal Reserve President Esther George appear among Fed representatives to speak this week .

The Fed kept its interest rates unchanged earlier this month and said there would be no further rate hike this year after it announced in December that two could happen.

A US trade delegation chaired by Trade Representative Robert Leitzer and Treasury Secretary Stephen Manuchen is due to visit Beijing this week to meet with Chinese Vice Premier Liu He to continue discussions to resolve the trade dispute between the two countries. two largest global economies.

The UK's deadline to leave on Friday to leave the European Union for two weeks until April 12 has been postponed to give more time to British Prime Minister Theresa May to convince lawmakers to leave the EU. accept the withdrawal agreement that she had negotiated. If legislators refuse to approve the agreement for the third time, a number of options will be opened, including Britain's exit from the EU without agreement.

The dollar fell sharply against the Japanese yen on Friday, as weak manufacturing data in the United States fueled concerns about the economy in general, and Treasury yields showed fears growing in recession.

The difference between the yields of 3-month Treasury bonds and 10-year bonds is reversed for the first time since 2007, after the US data error. The reversal of the yield curve is widely regarded as a major indicator of the recession.

Sean Simko, global head of fixed income securities at Stockholm Environment Institute investment firm in Oaks, Pennsylvania, said: "You have to take this very seriously, as a sign of slowing growth or a possible recession in the next 12 to 18 months, which the Fed is studying closely."

The greenback was down 0.81% to 109.92 at the end of the session, with a weekly loss of 1.4%.

But the greenback was up against the euro, with EUR / USD shedding 0.63% to trade at 1.1305, while weak euro area data added worries about the slowdown in the euro zone. Block economy.

"The March PMI adds that GDP growth was weak in the three most advanced economies in the first quarter, with Germany continuing to experience the bulk of the slowdown in the manufacturing sector," writes Simon MacAdam, Global economist at Capital Economics. World ".

"This helps reinforce the idea that we are looking at a more pronounced slowdown than markets expected a few months ago," said Carl Shamota, Director of Foreign Exchange and Structured Products Strategy at Cambridge Global.

"We are seeing a kind of recognition that the Fed is responding to deeper risks in the global economy," he said.

Sterling bounced back from the dollar on Friday as GBP / USD climbed 0.77% to hit 1.3208 after European Union leaders gave Teresa May a deadline to exit. 39; EU.

LONDON (Reuters) – The British pound fell on Thursday as its biggest one – day drop in 2019, as fears grew that Britain was leaving the EU on March 29 without a deal.

Next week, Investing.com has listed a number of important events that could affect the markets.

Monday, March 25

The Ivo Institute for Economic Research will publish a report on the business climate in Germany.

Charles Evans, president of the Chicago Fed, Patrick Harker, president of the Philadelphia Fed, and Eric Rosengren, president of the Boston Fed, prepared to speak.

Tuesday, March 26

The United States will publish data on building permits, housing starts and consumer confidence.

Chicago Fed President Charles Evans and Federal Reserve Chairman Patrick Harker will speak again, as will San Francisco's Marie Daley.

Wednesday, March 27

The Reserve Bank of New Zealand will announce its key rate and issue a price statement that will determine the economic conditions and factors affecting the monetary policy decision.

ECB President Mario Draghi will speak at an event organized by the ECB in Frankfurt.

Canada will publish the trade balance data.

Ester George, president of the Bank of Kansas City, comments on an event organized by the Money Marketers of the University of New York.

Thursday, March 28

New Zealand will publish data on business confidence.

The United States will release its final fourth quarter review report as well as their initial applications for employment and future home sales.

Federal Reserve Vice President Richard Clarenda, Federal Reserve Governor Randall Quarles, Federal Reserve Governor Michelle Bowman and Federal Reserve Chairman James Bullard are expected to speak.

Friday, March 29

Canada will publish data on GDP and commodity price inflation.

The United States will end the week with reports on personal expenses, the basic price index of personal consumption, Chicago operations and new home sales.
Federal Reserve Governor Randall Quarls will also speak.

– Reuters contributed to the preparation of this report.