Economic data, monetary policy and geopolitics will headline the financial markets this week. Monday’s release schedule provides only a small taste of what is to come.
Action begins at 09:00 GMT with a report from Italy on industrial output. Factory-level output in the Eurozone’s third-largest economy is forecast to grow 0.8% in January and 1.9% year-over-year. That follows a monthly gain of 1.6% in December.
The Italian government will also report on its February trade balance at 10:00 GMT. Rome posted a trade surplus of €5.252 billion in December.
The European Commission’s statistical agency will also report on its trade balance at 10:00 GMT. The region’s surplus is forecast to narrow slightly to €23.6 billion in January after coming in at €23.8 billion the month before.
Separately, government economists will release euro-wide construction data at 10:00 GMT. Construction output in the 19-member currency region is projected to rise at a seasonally adjusted 0.6% in January, which translates into an annualized gain of 1.3%.
No major North American data releases are scheduled for Monday. On the monetary policy front, Federal Open Market Committee (FOMC) member Raphael Bostic will deliver a speech at 13:00 GMT. Bostic will join the FOMC for its two-day policy meeting in Washington beginning Tuesday.
The US central bank is widely expected to raise interest rates on Wednesday, with the Fed Fund futures prices implying a 94.4% chance of liftoff. The policy announcement will be handed down alongside a quarterly summary of economic projections covering GDP, unemployment and inflation.
In currencies, the U.S. dollar index (DXY) is trading steady at two-week highs on Monday. The greenback returned more than half a percent between Wednesday and Friday.
EUR/USD
Europe’s common currency edged slightly lower at the start of Asian trading, falling 0.1% to 1.2275. The EUR/USD exchange rate has declined nearly 200 pips since 14 March. Initial support is located between 1.2250 and 1.2270. On the opposite side of the spectrum, immediate resistance is located at 1.2345.
GBP/USD
Cable continued to trade within a narrow band on Monday, extending a period of four straight days that saw prices capped between 1.3900 and 1.400. GBP/USD has attempted to retake 1.4000 several times over the past week but has fallen short every time. Current prices are at 1.3937. That psychological barrier remains the key resistance test.
USD/JPY
Despite its recent upward trajectory, the US dollar has struggled to regain its footing against the yen. The USD/JPY is down more than 1% from the 13 March high of 107.23. The pair is currently trading in the low 106.00s, where it faces initial support of 105.25. Positive momentum north of 107.00 will bring the pair back in range with last week’s high.
