Talking Points:
- Last week saw a number of interesting items after the Federal Reserve hiked rates for the first time in 2018. While the bank remains relatively hawkish, forecasting another two 25 basis point hikes this calendar year, the US Dollar remains as one of the weakest major currencies. This highlights the fact that there’s another significant push-point here, likely emanating from concerns around fiscal policy.
- A sinking US Dollar is helping to lift most major pairs, with the notable exception of the dynamics in USD/JPY[1], where the Yen is actually weaker than the US Dollar after last week’s bearish breakout. This highlights a number of interesting themes as we move into this week, which is a holiday-shortened week with Good Friday on the calendar. Also of note, this is the final week of Q1, so we’ll be seeing both month-end and quarter-end flows take place this week.
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If you’re looking for short-term indicators around the US Dollar, check out our IG Client Sentiment Indicator[4].
This Week’s Economic Calendar is Short and Relatively Light
This week’s calendar quiets from the Central Bank-heavy outlays of the past few weeks[5]. Friday is a holiday across many markets in observance of Good Friday, and this is the final week of the first quarter of 2018, so despite the quieter docket, the potential for volatility remains strong. The apex of activity for this week appears set for Thursday morning, as this is when we’ll get German unemployment numbers, Canadian GDP and then the Fed’s preferred inflation gauge, PCE out of the United States.
DailyFX Economic Calendar, High-Impact Events, Week of March 25, 2018
Chart prepared by James Stanley[6]
S&P Rallies After Friday’s Late-Session Sell-Off, Close at the Lows
Last week closed in a rather nasty manner for equity bulls, as an aggressive bout of selling in the final two hours of trading pushed the S&P 500 to fresh March lows[7]. Equity futures have shown a bullish tonality since futures opened last night, and it looks as though US stocks are going to start this week by clawing back a portion of those losses. The big question here is what happens at resistance, as the move so far appears to be corrective in nature. There’s a point of interest nearby around 2645, as this was the March low until last week saw sellers take it out.
If you’re looking for short-term indicators around SPX, check out our IG Client Sentiment Indicator[8].
