Forex Top Team

Market sentiment seems somewhat subdued as traders await confirmation from events next week, leading to a gradual loss of momentum.

EUR/USD has remained in a narrow range around 1.0925, with trading activity picking up temporarily following the release of inflation statistics from the EU and the US. However, by the end of the day’s trading session, there was little movement again. German data met expectations, while US core CPI exceeded forecasts. However, more sustained inflation could potentially hinder the Federal Reserve from fully implementing its cost reduction plan for this year. Investors are now turning their attention to industrial production statistics for January in the Eurozone.

Amidst speculation surrounding the Bank of Japan ahead of next week’s policy meeting, USD/JPY has exhibited volatile price movements, oscillating between the 147 yen and 148 yen levels.

Concerning the Bank of Japan, strong results from spring wage negotiations have increased speculation about negative interest rate policy adjustments. However, amidst daily reports involving central bank officials, the market seems to be gradually tiring. While expectations are focused on negative interest rate adjustments in March, there’s a possibility of these being carried over to April, with efforts being made to minimize market shocks regardless of the outcome. Additionally, efforts are being made to incorporate information about ETF purchase suspensions and Yield Curve Control (YCC) abolition into the market.

Regarding the Federal Reserve, the market is gradually forming a consensus on a June rate cut. Despite passing through US employment statistics and CPI data, there hasn’t been significant change in the market’s pricing. The dollar itself has paused its downward trend, making it less prone to movement in either direction.

In this context, traders will be checking a series of US economic indicators in the foreign markets ahead. the US Producer Price Index (PPI) for February, US Retail Sales for February, and US Initial Jobless Claims (03/03 – 03/09) are scheduled for release. This will be followed by US Business Inventories for January.

The US PPI, which is highly anticipated by the market, is expected to rise from +0.9% to +1.2% year-on-year. Excluding food and energy, the year-on-year change is forecasted to be +1.9%, a slight moderation from the previous +2.0%. While these are signs of a slight slowdown, it’s worth noting they are already at low levels. US retail sales often show significant deviations from market expectations, but the monthly forecast is expected to turn positive from -0.8% to +0.8%. Excluding automobiles, the monthly forecast is expected to turn positive from -0.6% to +0.5%. These forecasts suggest avoiding a downturn in the economy. Since these expectations aren’t shock-inducing, unless significant changes are observed, their impact on the market’s speculation about a June rate cut is likely to be limited.

In terms of speaking events, speeches are scheduled from officials such as Decos, the Governor of the Bank of Spain, Schnabel, an ECB board member, Knot, the Governor of the Netherlands Bank, de Guindos, ECB Vice President, and Stournaras, the Governor of the Bank of Greece. With upcoming policy announcements from the Bank of Japan, the Federal Reserve, and the Bank of England next week, the focus is currently on remarks from the ECB, which has already concluded its recent meeting.

Today’s focus is on the US Producer Price Index (PPI) and US Retail Sales. If there are significant deviations from expectations in these results, we can expect significant movements in the USD. Keep an eye on the USD’s movements after these announcements.

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