Dollar witnessed a drastic fall last week. It inched lower near to 30 January 2023 low 101.915 after the U.S. Federal Reserve sounded close to calling time on interest rate hikes, while the Swiss National Bank and Bank of England pushed ahead with further rate increases. Rupee was able to settle slightly strong at 82.3150 by 0.22% against the dollar.
Bullions prices posted their multi week high, as the dollar extended its fall. Gold tested life time high 60455 and Silver sparked above 71000. Crude Oil was able to recover after hitting their lowest since late 2021, supported by rising gasoline prices in the United States. A weaker dollar also supported fed fuel demand hopes. MCX crude oil gained 3.60%. Brent Crude was up 2.72%, at $74.49 a barrel. U.S. West Texas Intermediate (WTI) gained 4.48%, to $69.19.
Base metals remained somewhat mixed. Copper witnessed more than 4% gain, and settled at 785.75. While Aluminum and Zinc settled down by 0.39% and 1.77% respectively.
Important Economic Data and Events
US
Economic calendar will start with CB Consumer Confidence released on Tuesday. This could have a negative impact on dollar and is likely to show the impact of stresses in the financial system. Data foreseen slightly lower at 101 compared to previous 102.90.
On Thursday, the dollar will react to final US growth numbers for the final quarter of the previous calendar year.
US economic growth expects to come at 2.7% unchanged from the previous 2.7%. In the previous quarter was weaker than the 2.9 percent recorded in the initial advance estimates. Fall in spending on goods and lower spend on services also impacted second advance estimates for growth.
The core PCE price index, released on Friday with a forecast of 0.4% as compared to previous 0.6%. This would have a negative impact on the dollar. As it will add to concerns over the prospect of a more hawkish Fed.
Other reports include data on pending home sales and initial jobless claims.
Several Fed officials are also due to speak during the week, including Fed Governor Philip Jefferson, Boston Fed President Susan Collins, Richmond Fed President Tom Barkin, and governors Christopher Waller and Lisa Cook.
Eurozone
Bundesbank chief Joachim Nagel is due to speak on Monday and ECB President Christine Lagarde is to make a speech in Frankfurt on Tuesday – investors will be on the lookout for any indications on how policymakers are viewing the inflation threat amid ongoing turmoil in the banking sector.
The Eurozone is to release inflation data on Friday. Which will have a strong impact on the Euro. Inflation expected to come slow at 7.1% compared to previous 8.5%. Core inflation, which strips out volatile elements including food and fuel prices, expected to accelerate by 5.7% from 5.6%.
Meanwhile, the banking crisis has prompted fears that lending will slow, acting as a drag on the economy.
UK
BOE Gov Bailey Speaks is due to speak on Monday and Tuesday – investors will be on the lookout for any indications on how policymakers are viewing the inflation threat amid ongoing turmoil in the banking sector.
UK’s GDP numbers for the October-December period of 2022 will also be watched. Data foreseen at 0.0% unchanged from previous 0.0%.
China
Chinese Manufacturing PMI data on Friday will be closely watched. Data will highlight the strength of the recovery in the world’s second largest economy in the wake of the lifting of pandemic restrictions.
Japan
In Japan, Tokyo inflation data on Friday will be in the spotlight. Forecast is at 3.1% from the previous 3.3%. The report is expected to show that inflation topped the Bank of Japan’s 2% target for the tenth straight month.
Expectations are high that incoming BOJ Governor Kazuo Ueda will oversee the unwinding of yield curve controls and negative interest rates during his tenure after a decade of unprecedented stimulus by his predecessor.
Domestic Economic Data Points
On March 31, we will have fiscal deficit and infrastructure output data for February. Current account and external debt numbers for the quarter ended December FY23 will also be released the same day.