The week after the FOMC rate decision will have Fed chair Powell to further expand on his thoughts. The SMB will release their monetary policy assessment. The UK government will announce their annual budget along with CPI data.
What are some of the key events in the new trading week:
Monday:
- ECB Lagarde scheduled to speak at 3:30 AM ET/0:730 GMT
- Fed chair Powell will speak at 10 AM ET/12 PM GMT. Powell is speaking at the national Association for business economics annual economic policy conference.
Tuesday
- ECB Pres. Lagarde due to speak at 9:15 AM ET/1315 GMT
- S&P chairman Jordan speaks at 11:15 AM ET/15:15 GMT
Wednesday
- UK CPI will be released at 3 AM ET/0700 GMT. Last month year on year inflation
Inflation
Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean that there is inflation. What leads to inflation is a faster increase in the money supply in relation to the wealth produced (measured with GDP). As such, this generates pressure of demand on a supply that does not increase at the same rate. The consumer price index then increases, generating inflation.How Does Inflation Affect Forex?The level of inflation has a direct impact on the exchange rate between two currencies on several levels.This includes purchasing power parity, which attempts to compare different purchasing powers of each country according to the general price level. In doing so, this makes it possible to determine the country with the most expensive cost of living.The currency with the higher inflation rate consequently loses value and depreciates, while the currency with the lower inflation rate appreciates on the forex market.Interest rates are also impacted. Inflation rates that are too high push interest rates up, which has the effect of depreciating the currency on foreign exchange. Conversely, inflation that is too low (or deflation) pushes interest rates down, which has the effect of appreciating the currency on the forex market.
Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean that there is inflation. What leads to inflation is a faster increase in the money supply in relation to the wealth produced (measured with GDP). As such, this generates pressure of demand on a supply that does not increase at the same rate. The consumer price index then increases, generating inflation.How Does Inflation Affect Forex?The level of inflation has a direct impact on the exchange rate between two currencies on several levels.This includes purchasing power parity, which attempts to compare different purchasing powers of each country according to the general price level. In doing so, this makes it possible to determine the country with the most expensive cost of living.The currency with the higher inflation rate consequently loses value and depreciates, while the currency with the lower inflation rate appreciates on the forex market.Interest rates are also impacted. Inflation rates that are too high push interest rates up, which has the effect of depreciating the currency on foreign exchange. Conversely, inflation that is too low (or deflation) pushes interest rates down, which has the effect of appreciating the currency on the forex market.
Read this Term came in at 5.5%. For February is expected to rise to 5.9%. MoM last month was -0.1%. This month is expected to rise by 0.6%
- BOE Bailey speaks at 8 AM ET/1200 GMT
- Fed Chair Powell will speak at 8 AM ET/1200 GMT
- UK annual budget release
Thursday
- SNB monetary policy assessment will be released at 4:30 AM ET/0830 GMT with press conference at 5:30 AM ET/0930 GMT
- Germany flash manufacturing PMI for March. Prior month 55.8. Expectations 56.0. Service flash PMI expected at 54.1 (versus last month 55.8). Composite 54.0 (versus last month 55.8)
- UK flash manufacturing PMI. Estimate 57.1 versus 57.3 last month.
- US durable goods orders, 8:30 AM ET/1230 GMT. Estimate -0.5 versus 1.6% last month. Ex transportation +0.6 versus a 0.7% last month
- US weekly unemployment claims. Estimate 210K versus 214K last week
- US Markit Flash manufacturing PMI for March, estimate at 5.8 versus 57.5 last month. Services PMI 56.0 estimate versus 56.7 last month
Friday
- UK retail sales for February. 3 AM ET/0700 hrs. GMT. Estimate 0.8% versus 1.9% last month. EX fuel, 1.0% versus 1.7% last month.
- German IFO business climate index. 5 AM ET/0900 GMT. Estimate 94.0 versus 98.9 last month
- US Michigan consumer sentiment (revised). 10 AM ET/1400 GMT. 59.7 versus 59.7 preliminary. Prior month was at 62.8
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