FUNDAMENTAL REVIEW FOR THE WEEK (4 - 8 March 2024)

The past week could not reveal a clear winner in the confrontation between the dollar and the “risks” - a sideways trend was observed for many key currency pairs, without a clear trend.

In the next 2.5 weeks (until the Fed meeting on March 20) there will be many important key fundamental events for every taste. This week it is worth noting Jerome Powell's speech to Congress on Wednesday-Thursday, the ECB meeting on Thursday and nonfarms on Friday.

The labor market in the United States is now beginning to play an increasingly important role due to recent statements by Fed officials that the dual mandate for inflation and unemployment has become more balanced in favor of the latter. Thus, if the labor market slows, the Fed will not wait for inflation to fall further before cutting the rate.

Many are waiting for hints from Jerome’s speech in the middle of the week regarding the timing of rate cuts and the timing of QT winding down (quantitative tapering, quantitative “decrease”, winding down Central Bank incentives). And if, with rates, Mr. Powell will most likely make do with the formulations from the last meeting - “we need more historical data and a stable trend in reducing consumer prices,” then there is a greater chance of specifics on QT.

As for the ECB meeting on Thursday, no one is going to touch the rate now, but they can give specifics about the meeting when it is necessary to do so. While the wording is rather vague - “in the summer”, now Christina Lagarde can point her finger at a specific month - for now the best chance is given to the June quorum.

According to nonfarms, the estimated numbers are still in bearish territory - 193k versus 350k for last month, but lately these forecasts rarely coincide with the actual output values. Midweek reports from ADP and JOLTS will help focus the financial focus a bit, but all the heat and loot hunting will be on during the data release.

Good luck and informed investment decisions!