Weekly Market Outlook: FOMC and BOE in focus this week

März 15, 2021 09:30

Central bank news announcements take centre stage this week with the US Federal Reserve’s FOMC meeting minutes release and economic projections due on Wednesday 17 March, followed by a press conference with Fed Chairman Jerome Powell. 

Traders will be focused on the Fed’s response to surging bond yields and the signing of Joe Biden’s $1.9 trillion stimulus plan. Will they follow the European Central Bank who announced last week they are stepping up bond purchases in response to rising yields?

The Bank of England also releases its latest Monetary Policy Summary report on Thursday 18 March but no significant changes are expected. The Bank of Japan also releases its Monetary Policy Statement on Friday 19 March.

You can learn more about some of the global themes affecting the markets in this selection of education articles:

Weekly Forex Calendar

Source: MetaTrader 5 trading platform provided by Admiral Markets

 

Did you know that three times a week, three professional traders talk through the markets live and show you how to identify potential trading opportunities? Reserve your complimentary spot in the Admirals Spotlight webinar now by clicking the banner below!

Free Trading Webinars

 

Trader’s Radar - FOMC Press Conference

On Wednesday 17 March, the US Federal Reserve releases its latest FOMC Economic Projections and FOMC Statement. This is followed by a press conference by Fed Chairman Jerome Powell. It’s likely to be a market mover for the US dollar considering this is the first time the market hears from the Fed after the recent surge higher in bond yields. 

Investors have been pricing in a much sooner than expected rise in interest rates due to an improving economy. This caused bond investors to sell their positions as they pay a fixed rate and could lose out if interest rates go higher. As bond prices go down, bond yields go up. 

This leaked into the Eurozone which caused the ECB to increase their bond purchases to make sure yields do not get too high which increases the cost of borrowing and can dent the economic recovery. Will the Fed follow suit?  

Source: Admirals MetaTrader 5, USDX, Monthly - Data range: from Nov 1, 2004, to Mar 12, 2021. Performed on Mar 12, 2021, at 7:00 pm GMT. Please note: Past performance is not a reliable indicator of future results. 

 

In the long-term, monthly chart of the US dollar index above it’s clear to see the range which as developed between long-term support and resistance levels around ~$103.00 and ~$89.00, denoted by the two black horizontal lines. 

Recently, the price has bounced from the lower horizontal support level which has helped to lift the US dollar overall. This has caused weakness in currency pairs such as AUDUSD, EURUSD and NZDUSD, as well as Gold. 

An improving economy could see buyers continue to push the US dollar higher, especially as some other European countries go into a third lockdown. However, traders may wait for the assessment from the Fed on Wednesday. 

If you’re feeling inspired and ready to trade live in the market, you can open a live trading account by clicking on the banner below and accessing an impressive range of trading features to support you in your journey.

Trade Forex & CFDs

 

Corporate Trading Updates and Stock Indices

Global stock markets bounced higher last week, mainly led by European indices such as the DAX 30 and CAC 40. The weaker euro certainly helped to lift European stock markets so this week’s news on the US dollar and its impact on the euro is one to watch. 

US stock market indices also pushed higher last week. However, the Nasdaq 100 is still trading below its record high with the Dow Jones 30 surging well above its record high. Investors are currently going through a sector rotation out of high-flying technology stocks and into value-based stocks in industrials, banks and energy. 

Source: Admiral Markets MetaTrader 5, SP500, Daily - Data range: from Jun 30, 2020, to Mar 12, 2021, performed on Mar 12, 2021, at 6:30 pm GMT. Please note: Past performance is not a reliable indicator of future results. 

 

Past five-year performance of the S&P 500: 2020 = +16.17%, 2019 = +29.09%, 2018 = -5.96%, 2017 = +19.08%, 2016 = +8.80%, 2015 = -0.82%.

The long-term trend of the S&P 500 stock market index shown above is still intact - even after the sell-off during February. The price has now moved back towards its all-time high but has still not yet traded above it unliked the Dow Jones 30 index. 

This means there could still be room to breathe towards the upside, especially if the Fed help to lift markets with their comments on Wednesday. 

Did you know that you can use the Trading Central Technical Ideas Lookup indicator to find actionable trading ideas on this index and thousands of other instruments across Forex, stocks, indices, commodities and more?

You can get this indicator completely FREE by upgrading your MetaTrader 5 trading platform provided by Admirals to the exclusive Supreme Edition!

Download MetaTrader 5 Supreme Edition

INFORMATION ABOUT ANALYTICAL MATERIALS:

The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admiral Markets investment firms operating under the Admiral Markets trademark (hereinafter “Admiral Markets”) Before making any investment decisions please pay close attention to the following:

  1. This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
  2. Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
  3. With view to protecting the interests of our clients and the objectivity of the Analysis, Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
  4. The Analysis is prepared by an independent analyst, Jitan Solanki (analyst), (hereinafter “Author”) based on their personal estimations.
  5. Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis.
  6. Any kind of past or modeled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
  7. Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.
Avatar-Admirals
Admirals
Eine Komplettlösung für das Bezahlen, Investieren und Verwalten Ihres Geldes

Admirals ist mehr als ein Broker. Wir sind der Dreh-und Angelpunkt für Ihre Finanzen, indem wir Ihnen eine breite Palette von Finanzprodukten und -dienstleistungen anbieten. Wir machen es möglich, persönliche Finanzen durch eine Komplettlösung für das Investieren, Ausgeben und Verwalten von Geld anzugehen.