Three markets to watch next week (10.03.2023)

Focus next week will be on US inflation and retail sales data as the FOMC March meeting looms large. Traders from Europe will also pay attention to the rate announcement from ECB on Thursday, as the central bank is set to deliver another 50 basis point rate hike. Be sure to watch USDJPY, GOLD and DE30 next week!

USDJPY

Two pieces of key US data will be released next week. The first one, and the one that has more impact on Fed's decision, will be released on Tuesday, 1:30 pm GMT and it will be the CPI report for February. The second one will be US retail sales print for February, scheduled for Wednesday, 1:30 pm GMT. Economists expect slowdown in US inflation while retail sales are expected to come more or less flat month-over-month. USDJPY climbed on Friday after the Bank of Japan failed to make a move of rates or yield target and US data next week will be another chance for a move on the pair.

GOLD

US data scheduled for next week, especially CPI print, is likely to have an impact on market odds for FOMC minutes. This may keep USD moving but will also have an impact on precious metals. Strong CPI print could see rate hike odds move even closer to 50 basis points and it would be negative for GOLD. Gold price jumped last week amid flight to safety following SVB issues, allowing it to bounce off the $1,800-1,810 area. However, a hot CPI report may reverse those gains.

DE30

 While US data scheduled for this week may set expectations for next FOMC decision, traders from Europe will hear from the ECB as soon as this Thursday, 1:15 pm GMT. A 50 basis point rate hike, to 3.00% (deposit rate), is almost fully priced in by the markets and the real question is what comes next. Goldman Sachs and Deutsche Bank see three more quarter-point rate hikes afterwards with a 3.75% terminal rate in July while Morgan Stanley and Barclays see a 4% peak. Any hints on even higher rates are likely to exert pressure on European indices, like DE30.