Dollar near 2-week highs ahead of Fed

Market focus is on BoJ, BoE, RBA and the Fed all due this week.

By Nadia Elbilassy | @Nadia Elbilassy | 18 March 2024

Market open
  • Dollar stabilizes near a two-week peak, driven by anticipation of hawkish signals from the Fed amidst strong U.S. inflation data.

  • China's industrial production exceeds expectations, but retail sales disappoint, while Asian currencies remain stable.

  • Oil prices rise on supply tightening concerns, fueled by attacks on Russian energy infrastructure.

On the Market Watch:

Attention shifts to upcoming central bank meetings, led by the Bank of Japan and the Federal Reserve.

The Federal Reserve is anticipated to maintain current interest rates, with close attention paid to any indications regarding potential interest rate adjustments in 2024. However, there is a possibility that the central bank could adopt a more hawkish stance than what markets anticipate, particularly in light of February's inflation data revealing inflation persisting at higher levels than initially projected.

In currencies, the dollar, hovering near its two-week peak, stabilized amid heightened anticipation for any hawkish signals from the Fed, prompted by robust U.S. CPI and PPI releases from last week.

The Aussie rose slightly to 0.656 ahead of the Reserve bank of Australia’s rate decision scheduled for Tuesday. It is widely anticipated that the RBA will maintain current interest rates and provide minimal indication regarding the timing of potential policy easing.

On the data side, China’s industrial production surpassed projections for the first two months of 2024 while retail sales fell short of expectations. Asian currencies continued to trade in a tight range.

In Commodities, oil prices edged higher, building upon last week's increase of nearly 4%, fueled by perceptions of tightening supply.

Heightened risks were observed due to additional attacks on Russian energy infrastructure. Brent crude oil futures for May delivery rose by 47 cents, equivalent to a 0.5% gain, reaching $85.81 per barrel. While WTI futures rose also 0.6% to 81.53.