The FOMC meeting is already behind us but it does not mean that US monetary policy will not be in focus next week as well. Fed Chair Powell is set to deliver a speech on economic outlook to NABE and investors will look for more info on upcoming balance sheet reduction. Apart from that, indices will get a chance to move during flash PMI releases while gold may become more active by the end of the week when NATO meets.
DE30
European stock markets reached fresh post-invasion highs this week but gave back part of the gains on Friday. A big event for European equities next week will be the release of flash PMI indices for March on Thursday. This will be the first survey that was conducted fully after the beginning of the Russian invasion of Ukraine and therefore will be watched closely. As always, releases from France and Germany at 8:15 am and 8:30 am GMT, respectively, will be the most closely watched. Market expects slight deterioration in manufacturing and services sectors.
USDJPY
Recent FOMC meeting proved that US central bankers became much more hawkish in recent months. Median expectation points to at least 6 more rate hikes this year and a decision on the beginning of quantitative tightening may be announced during a meeting in May. However, there is a while until this meeting and investors will surely look for more clear hints in Fed members' speeches. Jerome Powell will deliver a speech on economic outlook to the National Association for Business Economics on Monday at 4:00 pm GMT. USDJPY rallied to 119.00, supported by the hawkish Fed, but will this strength last?
GOLD
In spite of the Fed delivering a rather hawkish message, gold managed to catch a bid. Precious metal defended the $1,900 area on Wednesday and launched a recovery move later on. While monetary policy is a big driver for gold, one cannot forget that geopolitics are playing a similar or even bigger role. War is still raging in Ukraine and an emergency NATO summit was called for Friday. Leaders of NATO countries, including US President Biden, will discuss the current geopolitical situation and next moves.
