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Monday, Mar 23, 2026

Tuesday, Mar 24, 2026

Wednesday, Mar 25, 2026

Thursday, Mar 26, 2026

Friday, Mar 27, 2026

• After hawkish Fed, dollar traders turn to preliminary PMI data.
• Pound set for a busy week amid inflation, PMI and retail sales numbers.
• Japan’s CPI to determine how likely an April BoJ hike is.
• Australia’s CPI could solidify the case for a third consecutive RBA hike.
• After the central bank spree, agenda becomes lighter.

Following a very busy week, with news about the war in the Middle East flowing continuously and seven major central banks deciding on monetary policy amidst all this geopolitical uncertainty and the profound energy crisis, the calendar becomes notably lighter next week.

Of course, this does not mean that there are no data releases for traders to pay attention to. The spotlight may be on the preliminary PMIs for March from several major economies as they will provide a first glimpse of how business activity fared after the war erupted and what the impact of skyrocketing energy prices were.

How will the US PMIs impact Fed expectations?

Getting the ball rolling with the US, the Fed decided to hold interest rates unchanged as expected and projected higher inflation and steady unemployment. Although the new dot plot continued to point to a single 25bps rate reduction by the end of 2026, Fed Chair Powell said that the uncertainty surrounding the rate path has increased markedly amid the war in the Middle East, and that a “meaningful” number of his colleagues are now favoring less easing than they did three months ago. Indeed, according to the plot, the number of officials favoring interest rates to remain untouched by the end of the year has increased to seven from four in December.

This prompted investors to further scale back their rate cut bets, assigning only a mere 15% chance of a quarter-point cut by the end of the year, and thereby allowing a fresh spree of dollar buying. Wall Street slipped again, while gold extended its tumble, falling below the key support zone of $4,840.

With all that in mind, should the flash PMIs, released on Tuesday, reveal that business activity was hurt severely by the energy crisis, investors will have to face a dilemma. Sell the dollar on signs of slowing economic growth or buy it due to concerns about accelerating prices charged by companies, which could lead to higher inflation and thereby an even more hawkish Fed.

Nonetheless, concerns about growth could outweigh inflation worries as productivity and profitability damage may prompt businesses to keep prices as competitive as possible. This may weigh on the US dollar as some traders become more convinced about a rate cut by the end of the year. On the other hand, a decent headline print accompanied by accelerating prices could suggest that the economy can withstand unchanged rates for a longer period of time, thereby allowing even more dollar buying.

The weekly ADP employment change could also provide a hint on how the private sector is faring as a further slowdown could translate as a first indication that businesses are indeed struggling.

Will the UK data corroborate bets of BoE rate hikes?

Pound traders will remain extra busy next week as, after this week’s Bank of England decision, the UK flash PMIs for March will be released on Tuesday, followed by Wednesday’s UK CPI data and Friday’s retail sales, both for February.

The BoE also stood pat this week, as the war in Iran dramatically shifted expectations away from rate cuts. What was surprising, though, was that the decision was unanimous, which means that even the most dovish members were convinced that they needed to buy some time.

With policymakers also indicating that they stand ready to act to ensure inflation’s return to their 2% objective, investors bolstered their rate hike bets, penciling in a 40% probability of a 25bps increase at the next gathering, and a total of 60bps by the end of the year. This translates into two quarter-point hikes and a decent 40% chance of a third.

Thus, should the CPI data reveal still-sticky inflation in February, and should the PMIs suggest that the skyrocketing energy prices have sent consumer prices even higher in March, the BoE’s implied path could become steeper, and the pound could recover more ground. It could even outpace the US dollar as the shift in the BoE’s rate path has been more dramatic than the Fed’s.

The euro also enjoyed some gains after the ECB adopted a similar stance to the BoE’s, highlighting the upside risks to inflation and noting that they remain determined to ensure that inflation remains near 2%.Investors are now expecting 60bps worth of rate hikes by the ECB and the Tuesday’s Eurozone PMIs could prove key in supporting or disregarding that view.

Will Japan’s inflation figures cement an April rate increase?

In Japan, BoJ officials also decided to remain sidelined on Thursday, but they appeared concerned about the impact of surging oil prices on underlying inflation. Board member Takata repeated his proposal to raise rates up to 1.0%, while another hawk joined him to dissent the view that inflation will durably hit 2% sometime after October, arguing that this could happen as soon as April. On top of that, Governor Ueda said he believes the outcome of this year’s spring wage negotiations may be better than previous years.

The hawkish message pushed dollar/yen slightly lower as market participants took the probability of a rate hike in April above 50%, but the already strong dollar kept the pair within the 158-160 zone, prompting finance minister Katayama to warn for the umpteenth time that they remain ready to intervene in the FX market at any time.

The next test for the Japanese currency may be the National CPI numbers for February, due out during the Asian session on Tuesday. In January, both the headline and core CPI rates slipped to 1.5% y/y and 2.0% y/y from 2.1% and 2.4%, respectively, suggesting that the upside risks to inflation stemming from the tumbling yen had yet to materialize.

A further slowdown in February could somewhat weigh on the sense of urgency for a BoJ hike in April and thereby allow further yen selling. However, this could trigger actual intervention from the finance ministry as Katayama has been very vocal about it lately. On the other hand, accelerating price pressures could corroborate the BoJ’s view and perhaps push the yen instantly higher. In any case, it seems that the risks surrounding the yen may be tilted to the upside, especially with the dollar/yen pair hovering near the 160.00 zone.

Is the RBA headed for a third straight quarter-point hike?

The RBA is the only major central bank raising interest rates consistently. After enacting a tightening cycle on February 3, delivering its first quarter-point rate hike since November 2023, the Bank decided to proceed with a back-to-back rate increase in March. Officials of this Bank also warned of a “material” risk to inflation amid geopolitical tensions in the Middle East and kept the door open to further increases.

Following the decision, the Australian overnight index swaps (OIS) market pointed to a strong chance of a third consecutive rate hike at the May meeting. The probability for another 25bps increase in May is currently standing at around 60%.

Thus, Australia’s CPI data for February could attract special attention. If the numbers point to stickier inflation even before the rally in oil prices, the probability of a May rate hike could move closer to certainty and the aussie is very likely to resume its prevailing uptrend.

It has been another highly volatile week, with financial markets moving on headlines from the war in Iran and sharp swings in energy prices. Attacks on energy infrastructure in the Middle East have escalated the conflict and prolonged the negative supply shock facing the global economy. As a result, the two-year European swap rate has risen from 2.60% to 2.82%, as the TTF gas price surged to EUR 62/MWh from EUR 50/MWh last week and the oil price to USD 110 per barrel from USD 100. Equities have declined as the war drags on with increasingly negative effects on demand. We expect markets to continue reacting to headlines from the war in Iran and emphasise that the destruction of energy infrastructure lengthens the impact on the global economy even when the war ends.

Amid high volatility and the war in Iran, central banks around the world met this week. The US Federal Reserve kept the target range at 3.5-3.75%, as expected. Chair Powell offered little forward guidance and appeared more concerned about inflation than downside growth risks. The median 'dots' were unchanged, but the distribution shifted towards later cuts. Markets reacted slightly hawkishly and now price only 5bp of cuts this year, while we still expect two cuts in June and September. The ECB also left key policy rates unchanged, keeping the deposit facility rate at 2.00%, as expected. President Lagarde offered a calm, balanced assessment of higher energy prices, suggesting the ECB is in no hurry to raise rates. In a forecast scenario closely aligned with current commodity futures pricing, ECB staff project euro area HICP inflation at 3.5% y/y in 2026 and 2.1% y/y in 2027, with growth at 0.6% y/y in 2026 and 1.2% y/y in 2027. We believe this should serve as the current baseline for the euro area and allow the ECB to keep policy unchanged at 2.00% in both 2026 and 2027, though we acknowledge clear upside risks to this call. Markets are currently pricing in 75bp worth of hikes this year. In contrast to the ECB and the Fed, the Bank of England delivered a clear hawkish surprise as all members voted to keep rates at 3.75%, whereas two had been expected to maintain their call for cuts. The communication was also hawkish, highlighting risks of second-round inflation effects from higher energy prices, so markets now price three BoE hikes this year. In Japan, the Bank of Japan kept rates unchanged at 0.75%, as expected, and delivered no news that affected market pricing.

Beyond central bank meetings, this week also brought new macro releases. Germany's ZEW survey for March showed an improved assessment of the current situation, while expectations for future growth saw a historically sharp decline. In the United States, February PPI surprised to the upside for a second month, with broad-based increases suggesting tariff-related cost pressures are building, a hawkish signal. In China, the monthly data were slightly better than expected, with retail sales rising and smaller declines in house prices.

Next week, attention turns to the March flash PMIs for the euro area, UK and US on Tuesday. We expect the euro area manufacturing PMI to decline to 49.3 from 50.8, while the services PMI is likely unchanged as higher energy prices have yet to feed through. Spain's flash March inflation is due on Friday, while February inflation will be released for Japan on Tuesday and for the UK on Wednesday.

Full report in PDF. 

Economic data releases in Canada are quiet in the week ahead with the most notable being January’s Survey of Employment, Payrolls and Hours (SEPH) on Thursday, when we expect further stabilization in job vacancies following improvements in timelier job openings data from Indeed Hiring Lab.

February’s labour market report was weak with the unemployment rate rising to 6.7%. However, layoffs remained low and the unemployment rate was still below 7% in Q3, and 6.8% in Q4 2025.

Solid domestic demand beneath weak headline gross domestic product in Q4 2025 should continue to support a rebound in hiring early this year. We still look for the unemployment rate to gradually decline to 6.3% by the end of 2026.

We will also receive advance February industry data that should show a partial rebound after disruptions in the auto industry drove large declines in January.

Manufacturing sales dropped 3.9% due to a significant decline in transport equipment sales from atypical production disruptions at several Ontario plants. Wholesale sales also fell 1.5% in January. Some moderation in production disruptions should support a partial rebound in February sales with manufacturing on Tuesday and wholesales on Friday.

BoC and Fed stand pat on rates

Overall, as the Bank of Canada noted in its meeting on Wednesday, the economy started Q1 on a softer footing than expected. However, with weakness in production mostly driven by disruptions in the auto sector, we expect some recovery later in the quarter.

We have left our outlook for modest growth and improved per-capita economic conditions this year broadly unchanged, and for now expects relatively neutral economic impact from recent oil price increases in both Canada and the U.S. –with the BoC and U.S. Federal Reserve remaining on hold through 2026.

At their meetings this week, both central banks held rates steady and refrained from commenting too much on the economic impact from the ongoing Middle East conflict.

In Canada, persistently weak inflation pressure prior to the oil price shock should leave the BoC with room to wait for additional clarity, compared to the U.S., where inflation pressures have been more stubborn, and tariff-related pressures are starting to show up.

Retail sales rose 1.1% month-on-month (m/m) in January, coming in below Statistics Canada’s advance estimate of 1.5%.

In real terms, sales volumes increased 1.0% m/m, suggesting the gain was largely driven by higher activity rather than prices.

Auto sales rebounded, rising 2.0% m/m, driven by new car dealers (+2.5% m/m), marking the first increase in three months.

Receipts at gasoline stations and fuel vendors declined 0.4% m/m in both nominal and volume terms, pointing to weaker demand.

Core retail sales—excluding motor vehicles and gasoline—also strengthened, rising 0.9% m/m and starting the year on firmer footing.

• Gains were led by general merchandise retailers (+3.0% m/m), miscellaneous store retailers (+3.0% m/m), health and personal care stores (+1.2% m/m), and sporting goods and hobby stores (+1.0% m/m).
• The main laggard was food and beverage stores (-0.6% m/m), with declines also evident in real terms, suggesting softer demand.

Retail e-commerce sales rose 1.5% m/m in January.

Looking ahead, Statistics Canada’s advance estimate points to a further 0.9% m/m increase in February.

Key Implications

Consumers loosened their purse strings to start the year, with retail sales rising in January and early indications pointing to continued demand in February. Momentum in services spending appears intact, based on our internal credit and debit card data, likely supported by higher-income households with greater financial buffers. This keeps our outlook for Q1 real consumption growth at a relatively healthy 1.1% (quarter-on-quarter, annualized).

That said, the retail report is inherently backward-looking and, in this case, feels particularly in the rear-view day by day. New headwinds – from higher prices at the pump to financial market volatility – risk weighing on demand through both higher costs and a potential reversal of wealth effects.

Daily Pivots: (S1) 156.84; (P) 158.38; (R1) 159.25; More...

No change in USD/JPY's outlook. Correction from 159.88 is expected to extend lower to 38.2% retracement of 152.25 to 159.88 at 156.96. For now, near term outlook will be neutral with risk on the downside as long as 159.88 resistance holds, in case of recovery.

In the bigger picture, outlook is unchanged that corrective pattern from 161.94 (2024 high) should have completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94. This will remain the favored case as long as 55 W EMA (now at 152.70) holds. Firm break of 161.94 will pave the way to 61.8% projection of 102.58 to 161.94 from 139.87 at 176.75.

Daily Pivots: (S1) 0.7840; (P) 0.7899; (R1) 0.7942; More….

Intraday bias in USD/CHF remains neutral and some more consolidations would be seen below 0.7957. Further rally is in favor as long as 0.7746 support holds. Rise from 0.7603 is seen as correcting the whole down trend from 0.9200. Above 0.7957 will target 38.2% retracement of 0.9200 to 0.7603 at 0.8213.

In the bigger picture, a medium term bottom should be in place at 0.7603 on bullish convergence condition in D MACD. Rebound from there is seen as correcting the fall from 0.9200 only. However, decisive break of 55 W EMA (now at 0.8091) will suggest that it's probably correcting the larger scale down trend from 1.0146 (2022 high). On the other hand, rejection by the 55 W EMA will setup down trend resumption to 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382 at a later stage.

Daily Pivots: (S1) 1.3295; (P) 1.3382; (R1) 1.3517; More...

Intraday bias in GBPUSD remains neutral for the moment. With 1.3482 resistance intact, further decline remains in favor. On the downside, below 1.3216 will resume the fall from 1.3867 to 1.3008 structural support. However, decisive break of 1.3482 will argue that the fall from 1.3867 has completed, and turn bias back to the upside for 61.8% retracement of 1.3867 to 1.3216 at 1.3618.

In the bigger picture, considering bearish divergence condition in both D and W MACD, a medium term top should be in place from 1.3867. Firm break of 1.3008 support will argue that fall from 1.3867 is at least correcting the rise from 1.0351 (2022 low) with risk of bearish reversal. That would open up further decline to 38.2% retracement of 1.0351 to 1.3867 at 1.2524. For now, medium term outlook will be neutral at best as long as 1.3867 resistance holds, or under further development.

Daily Pivots: (S1) 1.1488; (P) 1.1518; (R1) 1.1570; More….

EUR/USD is still bounded in established range trading and intraday bias remains neutral. Further decline is in favor as long as 1.1666 resistance holds. On the downside, below 1.1408 will resume the fall from 1.2081 to 38.2% retracement of 1.0176 to 1.2081 at 1.1353. However, decisive break of 1.1666 will argue that the fall from 1.2081 has completed, and turn bias back to the upside for 61.8% retracement of 1.2081 to 1.1408 at 1.1824.

In the bigger picture, the break of 55 W EMA (now at 1.1495) confirms rejection by 1.2 key cluster resistance level. The whole up trend from 0.9534 (2022 low) might have completed as a three wave corrective rise too. In either case, deeper fall is now expected to long term channel support (now at 1.0528. Risk will stay on the downside as long as 1.2081 holds, in case of recovery.

ECB rate hike expectations are gaining traction in markets, with growing speculation that tightening could begin as early as April. Major institutions including Barclays and J.P. Morgan are now forecasting an initial move next month, followed by additional hikes in June and July, reflecting a rapid shift in policy expectations amid rising inflation risks.

Other banks remain slightly more cautious on timing but not direction. Morgan Stanley and Deutsche Bank both expect hikes starting in mid-year, while Goldman Sachs’ adverse scenario outlines a cumulative 75bps tightening path, with the possibility that April could still mark the beginning if energy-driven inflation intensifies further.

This repricing comes even as the ECB kept its deposit rate unchanged at 2.00% in the latest meeting. However, the updated projections told a different story, with 2026 inflation revised up to 2.6% while growth was cut sharply to 0.9%. This marks a clear shift away from the previous “goldilocks” environment toward a more challenging stagflation backdrop.

The ECB’s communication also underscored this transition. By publishing adverse and severe scenarios, policymakers effectively signaled readiness to act if energy prices remain elevated. The message was clear: while the baseline does not yet justify an immediate hike, contingency plans are firmly in place.

Within the Governing Council, three distinct camps have emerged. The hawks, led by Bundesbank President Joachim Nagel, are increasingly concerned about inflation expectations becoming unanchored and have openly warned that a more restrictive stance may soon be required.

In contrast, centrists such as France's Francois Villeroy de Galhau and Finland's Olli Rehn are urging caution. They emphasize the need to avoid overreacting to supply-side shocks, arguing that short-term energy-driven inflation should not automatically trigger aggressive tightening.

Meanwhile, the data-dependent camp, represented by Spain’s Jose Luis Escriva, continues to advocate a meeting-by-meeting approach. This group highlights the high degree of uncertainty surrounding the persistence of the energy shock and its transmission into core inflation.

Despite these internal divisions, markets are clearly leaning toward the hawkish interpretation. The shift in rate expectations has provided support for the Euro, which is among the stronger performers this week, particularly against the Swiss Franc.

The Franc’s weakness is partly policy-driven, as the SNB has stepped up its intervention rhetoric to prevent excessive appreciation. This has created a favorable backdrop for EUR/CHF, amplifying Euro strength beyond what ECB expectations alone would justify.

However, against the Dollar, the Euro’s gains remain more tentative. Price action is still capped below key resistance levels, suggesting the move may be corrective rather than the start of a sustained uptrend. For a more decisive shift, The market might need to see the ECB actually step closer to execute one of those 25 bps hikes.

In Europe, at the time of writing, FTSE is up 0.10%. DAX is up 0.07%. CAC is up 0.19%. UK 10-year yield is up 0.085 at 4.869. Germany 10-year yield is up 0.01 at 2.973. Earlier in Asia, Japan was on holiday. Hong Kong HSI fell -0.88%. China Shanghai SSE fell -1.24%. Singapore Strait Times fell -0.38%.

Canada retail sales rise 1.1% mom but miss expectations

Retail sales rose 1.1% in January, missing forecasts, but core spending remained firm with solid gains in general merchandise. February data points to continued steady momentum. Read more.

EU trade contracts sharply, US exports drag

Eurozone trade weakens: Exports fell -7.6% yoy, imports -7.3% yoy, resulting in a EUR 1.9B deficit; intra-Eurozone trade also declined, signaling soft internal demand. Read more.

NZ exports hit by soft China and Japan demand

NZ’s trade balance slipped into deficit as exports to China and Japan declined while imports surged. Soft Asian demand and rising external imbalance could weigh further on NZD. Read more.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.1488; (P) 1.1518; (R1) 1.1570; More….

EUR/USD is still bounded in established range trading and intraday bias remains neutral. Further decline is in favor as long as 1.1666 resistance holds. On the downside, below 1.1408 will resume the fall from 1.2081 to 38.2% retracement of 1.0176 to 1.2081 at 1.1353. However, decisive break of 1.1666 will argue that the fall from 1.2081 has completed, and turn bias back to the upside for 61.8% retracement of 1.2081 to 1.1408 at 1.1824.

In the bigger picture, the break of 55 W EMA (now at 1.1495) confirms rejection by 1.2 key cluster resistance level. The whole up trend from 0.9534 (2022 low) might have completed as a three wave corrective rise too. In either case, deeper fall is now expected to long term channel support (now at 1.0528. Risk will stay on the downside as long as 1.2081 holds, in case of recovery.