FUNDAMENTAL REVIEW FOR THE WEEK (11 - 15 March 2024)

The past week did not allow the dollar to turn the tide of the battle with “risks” - macroeconomic statistics, in general, did not favor the greenback, even the traditional “dovish” monetary position of the ECB on Thursday did not help.

Friday's non-farms - the key statistics of the previous week - came out better than forecast (275k versus 198k forecast), but with a negative revision of previous values. The accompanying negative figures for unemployment and wages also played a let down. The first bullish reaction to jobs was fleeting, but in the second reaction (to wages and unemployment) the risks more than made up for the losses, coming very close to the key psychological level - 1.10

And, in general, the market still prefers to short the dollar - the most important factor is the increasing probability of a rate cut in June from the Fed, after Jerome Powell's not very informative speech before Congress in the middle of the week - the probability of a rate cut in June increased by 0.25% - from 53%. up to 60% (according to the CME group portal). This is a bearish trigger for the greenback.

The coming week is a warm-up before the next five-day trading week with meetings of the Japanese and American Central Banks on March 19 and March 20, respectively. From the statistical data, we highlight reports on CPI inflation (Tuesday) and US PPI, as well as retail sales (both indicators on Thursday), these economic reports will influence the rhetoric and forecasts of Fed members.

Since the labor market came out generally quite good in terms of jobs, the Fed’s focus will now turn again towards inflation. According to forecasts, the data is still “strong” for the dollar, especially for retail sales (many attribute the January fall to bad weather at the beginning of the year)! If consumer prices do not continue to fall in February, then the precise forecasts of Fed members on the trajectory of rates during the meeting on March 20 may become tighter, with fewer declines in bank interest in a given year. This could give US bulls a new dose of enthusiasm and potentially end the current strengthening of risks!

Good luck and informed investment decisions!