News & analysis

The past week has seen the dual themes of higher for longer rates in the US and geopolitical conflict in the Middle East support the dollar DXY index around 2023’s peak of 106. Next week, markets will open with the weekend’s geopolitical developments in mind, once again. Barring any intensification or resolution, however, traders will then turn their attention to a mixed bag of data releases and central bank speakers. In the US, with Fed speakers now in their quiet period, the focus is set to turn to Q1 GDP figures and March PCE data. The first should highlight the continued resilience of the US economy, with the second set to favour the Fed keeping rates high for longer, if Chair Powell’s recent preview of the data is confirmed. Together, this once again offers a constructive backdrop for the dollar, that should contrast with less favourable conditions elsewhere. In Europe PMIs are set to shine a light on disappointing growth conditions, particularly in the eurozone, which should see the euro underperform. In Asia meanwhile a CPI release should confirm MAS’s recent hawkishness was well founded, while many traders will continue to closely monitor the BoJ as USDJPY continues to flirt with the 155 level. The big uncertainty, however, remains events in the Middle East. Having already produced some notable moves for South American currencies in particular, traders will be waiting with baited breath to see what next week brings. Given the increased level of market volatility, we have naturally received a lot of questions from the trading floor. As a result, we have answered some of the more prominent concerns in this week’s edition of the Week Ahead.

You can read the Week Ahead in full here:

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Authors: 

Simon Harvey, Head of FX Analysis

María Marcos, FX Market Analyst

Nick Rees, FX Market Analyst

 

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