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Fed Rate Hike, Dutch Election, and Article 50 Prospects Dominate Currency Market

14 March 2017 by FC Exchange

There’s plenty of exciting events that could shake markets this week such as the Dutch general election, the potential triggering of Article 50, and a possible US Federal Reserve rate hike, say currency experts FC Exchange.

Pound Sterling (GBP) Exchange Rate Awaiting Article 50 Trigger

UK Prime Minister Theresa May is extremely close to formally initiating Brexit – she’s on target to officially commence pulling Britain out of the EU by the end of the month. While some industry experts have suggested that markets have priced in the UK’s departure from the EU, it’s likely that sterling will experience fluctuations as the UK officially enters negotiation territory.

In terms of economic data, Wednesday will see the release of UK labour market figures which include employment change, unemployment rate and wage growth numbers. Thursday could also cause some notable movement as the Bank of England (BoE) announces its latest interest rate decision. It’s extremely unlikely that the central bank will adjust its bank rate at this point, but there’s always the possibility of a surprise, which would shake markets.

Euro (EUR) Exchange Rate Forecast for Dutch Election Movements

The euro could be in for an interesting week as the highly-anticipated Dutch elections take place on Wednesday. There’s the possibility that citizens could vote for Geert Wilders, leader of the Eurosceptic party, the Party for Freedom. Whether Wilders takes the crown or not, if he has a surge in popularity concerns will be raised for future elections and the possibility of the far-right taking control. Moreover, if Wilders is elected it will add additional fuel to concerns regarding the upcoming French elections.

Ecostats for the Eurozone this week include the ZEW German and Eurozone economic sentiment surveys due out on Wednesday and final Eurozone inflation figures on Thursday.

US Dollar (USD) Exchange Rate to Rally if Fed Hike Interest Rates

The US dollar could be in for a boost this week if the US Federal Reserve decides to hike interest rates. The Federal Open Market Committee (FOMC) will announce its decision in Wednesday’s stateside session and if a higher bank rate is on the cards, the greenback is likely to rally against a host of other currency majors.

Also out on Wednesday will be the highly influential US inflation numbers which are expected to show a rise in February from 2.5% to 2.7% year-on-year. Friday will close the week with the last piece of high-tier US data in the form of the University of Michigan confidence figure.

Australian Dollar (AUD) Exchange Rate Awaiting Labour Market Ecostats

The most exciting day for Aussie dollar trading this week is expected to be Thursday with the release of the Australian employment change and unemployment rate ecostats. Labour market data can offer an interesting insight into economic conditions and therefore cause significant market movements. In addition, the Australian dollar exchange rate will be sensitive to data from China, the nation’s largest trading partner, and commodity price changes.

New Zealand Dollar (NZD) Exchange Rate Forecast to Fluctuate on GDP Number

The New Zealand dollar will have a couple of opportunities to move this week with the most influential economic event taking place during Thursday’s Pacific trading session in the form of gross domestic product (GDP) figures. Economist predications suggest that the fourth quarter of 2016 will see a decline in GDP from 3.5% to 3.2% on the year. Friday will bring with it the New Zealand performance of manufacturing index which could also catalyse moderate movement.

With so many political events interspersed amongst central bank announcements and economic data this week, it’s likely the market will experience some dramatic swings.

Disclaimer: This economic update is provided by FC Exchange a Global Reach Group Company, industry leaders in foreign exchange. Authorised affiliates are permitted to reuse content.

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