All eyes and ears are on Russia and Ukraine, but don’t forget these top-tier events!
We’ve got a couple of central bank decisions, an OPEC meeting, a GDP release, and the NFP report due.
What are market watchers expecting for these potential catalysts?
Major Economic Events:
RBA monetary policy decision (Mar. 1, 3:30 am GMT) – The Australian central bank is widely expected to sit on its hands and keep rates unchanged at 0.10% for the time being.
This comes after a relatively cautious statement earlier on, dashing hopes that the RBA might be able to tighten policy within the first half of the year. Shifting to a more hawkish tone this time could mean some upside for the Aussie, but this might be an unlikely scenario given recent geopolitical tensions.
Australian quarterly GDP (Mar. 2, 12:30 am GMT) – The Land Down Under will be printing its Q4 2021 economic report card, possibly showing a 3.0% rebound in growth after the earlier 1.9% GDP contraction.
Weaker than expected results could cast more doubts on the RBA’s ability to hike by mid-2022 while a strong read could give Aussie bulls hope that the economy could weather incoming setbacks.
BOC monetary policy decision (Mar. 2, 3:30 pm GMT) – After keeping rates on hold since the onset of the pandemic, Canada’s central bank might be gearing up for a 0.25% interest rate hike to 0.50% this time.
However, fresh geopolitical troubles might force policymakers to rethink their optimistic stance, possibly giving room for new economic challenges. Then again, the surge in crude oil prices might translate to even stronger inflationary pressures, which warrants tighter monetary policy sooner rather than later.
U.S. non-farm payrolls (Mar. 4, 1:30 pm GMT) – Uncle Sam printed a rather impressive NFP reading for January, so dollar traders are keen to find out if the jobs momentum has been sustained.
Analysts are predicting a 400K increase in hiring for March, slightly slower than the earlier 467K increase and December’s 510K gain. This might still be enough to bring the jobless rate a notch lower to 3.9% for the month.
Leading indicators such as the ISM survey results and the ADP non-farm employment change reading are due throughout the week, so these might impact market expectations and the dollar’s direction.
Fed head Powell’s speeches – The Fed Chairperson has a bunch of testimonies lined up during the latter part of the week, as he will be speaking in front of Congress to discuss their views on inflation.
Powell will likely have to answer questions on how the conflict between Russia and Ukraine, as well as the resulting sanctions from developed nations, would impact the U.S. economy and the Fed’s policy bias.
Also, note that U.S. inflation is running at a 40-year high, so members of Congress would likely grill Powell on how they plan on keeping price pressures in check.
OPEC-JMMC meetings – Crude oil has been a hot topic ever since tensions flared between Russia and Ukraine, as the likelihood of production outages and sanctions would impact global oil supply.
Keep in mind that Russia is one of the world’s top oil producers, so output disruptions could push crude oil prices way past the $100 per barrel mark. Now this could spill over to even higher prices of goods and probably spark another energy crisis, so the cartel is under pressure to act.
Forex Setup of the Week: AUD/JPY
AUD/JPY 4-hour Forex Chart
With risk sentiment still likely to be the main driver of price action these days, I’m keeping this AUD/JPY symmetrical triangle pattern on my radar.
The pair has been forming lower highs and higher lows since November last year, creating a triangle formation that’s roughly 500 pips tall. This means that a breakout in either direction could be followed by a move that’s of the same height, so I don’t want to miss that one!
Price was rejected on its latest attempt to break above the resistance, gapping lower over the weekend to show that sellers hit the ground running. If this bearish energy is sustained, AUD/JPY could try to break below the triangle support at 82.00.
I’d probably hold out for a bearish moving average crossover and Stochastic to head south from the overbought zone to confirm that more losses are in the cards.
Also, it might be worth keeping tabs on the RBA decision and Australia’s Q4 2021 GDP release during the first half of the week to gauge where the Aussie is headed. That’s on top of checking the headlines on Russia to see if risk-off flows might stay in play!
