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In the week ahead: FOMC Statement, BOE Official Bank Rate, Fed’s Powell Speaks

calendar 19/03/2024 - 09:54 UTC

The US Dollar showed little change on Monday, with the dollar index (USDX) ending the session slightly higher, while further upwards momentum is displayed early on Tuesday. Dollar traders appear to remain on the sidelines ahead of a series of central bank meetings this week, among which are the United States, Britain, Australia, Norway, Switzerland, Mexico, Taiwan, Brazil and Indonesia. The Fed is widely expected to keep rates on hold for now, with investors currently pricing in less than three cuts of 25 basis points each in 2024.

Still, markets maintained their bets slightly above 50% that the Fed will have enough cause to begin cutting rates by June, according to the CME Fedwatch tool. Rate cut outlook could change given the Fed’s recent comments that the path of inflation will largely dictate the rate cuts schedule.

In other news, the Bank of Japan increased interest rates for first time in 17 years, supported by confidence that inflation targets are within reach. The bank raised short term interest rates by ten basis points to 0%, however it intends to continue buying Japanese government bonds at a "steady" pace.

In Wall Street, sentiment remains strong as all three main indices ended higher on Monday, closing in on record highs as investors appear optimistic regarding the interest-rate outlook ahead of the Federal Reserve meeting this week. In December, Fed members projected three cuts for this year, but some believe that could be reduced to two. According to Bloomberg, Apple is in talks with Alphabet to use the latter's Gemini AI engine to incorporate its features into its flagship iPhones. Tesla shares rose 6% after the electric carmaker said it would increase the price of its Model Y EVs in some European countries by about 2,000 euros this week.

In today’s session, some price action could be observed upon the release of ZEW Economic Sentiment data from the EU, CPI numbers from Canada and building permits from the U.S.


The EUR/USD pair edged lower to multi-day lows just above 1.0870 amid a firmer Dollar on Monday. The Federal Reserve monetary policy meeting on Wednesday will be in the spotlight, with no change in rates expected.

The recent US economic data showed inflation in the US economy remains elevated, and this pushed out market expectations for the first rate cut in June. Investors have priced in a nearly 73% chance that the Fed will cut rates in July, according to the CME FedWatch Tools.

The European Central Bank (ECB) decided to keep borrowing costs at a record high at its March meeting. Nonetheless, the central bank policymakers signalled progress in easing inflation and began discussions about the rate cut.

Market participants will keep an eye on the German and Eurozone ZEW Survey which are due today. Also, the US Building Permits and Housing Starts will be released later in the day.



Gold prices regained some ground Monday, but sentiment on the precious metal soured by growing expectations that the Federal Reserve may lean less dovish on monetary policy later this week.

Gold prices fell almost1% last week after data showed that U.S. consumer prices increased solidly in February and producer prices rose more than expected, reducing hopes around early Fed rate cuts.

The Fed's two-day meeting, which ends on Wednesday, is expected to culminate in an unchanged decision on interest rates, but an updated outlook for the rate path ahead and economy will garner the bulk of attention.



Oil prices climbed to a four-month high on Monday on lower crude exports from Iraq and Saudi Arabia and signs of stronger demand and economic growth in China and the U.S.

Iraq is set to cut its crude exports to 3.3 million barrels a day in the months ahead to make up for producing more oil than agreed under the OPEC+ voluntary agreement reached in January.

In China, the world's biggest oil importer, factory output and retail sales beat expectations in the January-February period, marking a solid start for 2024.

Market participants will be taking cues about global growth from swatch of central bank meetings including the Fed later this week.


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Wall Street's main indexes closed higher on Monday, with megacap growth stocks such as Alphabet and Tesla supporting a rebound in technology-heavy US tech 100 while investors also waited anxiously for the U.S. Federal Reserve's meeting this week. US 500 added on Monday 0.47% while US 30 and US Tech 1000 gained 0.25% and 0.62% respectively.

Tesla shares finished up more than 6% after the electric carmaker said it would soon increase the price of its Model Y EVs in parts of Europe.

Market participants now turn their focus to the 2-day Fed meeting, which begins on Tuesday with a decision due on Wednesday.

US 500

The materials contained on this document should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. For the full disclaimer click here.

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