Forex fundamental events to watch in March 2017

This month will not be boring at all as there will be several events around the world to stir the Forex markets. The fundamental events this month should be watched very closely by all traders, especially for the currencies they represent.

Central bank meetings

Most central banks have around 8 meetings in a year during which they inform the public of the monetary policies they intend to implement. For Forex traders, these announcements are crucial in speculating how the value of a currency will change. The most important thing to look out for is the interest rate decision, but also other issues like open market operations.

A hike in interest rates reduces inflation and makes a currency stronger and vice versa. When the central bank introduces economic stimulus packages through open market operations, this increases inflation and decreases the value of the currency.

There is usually plenty more information issued during these central bank meetings, but these are the issues traders pay closest attention to. So, which banks’ announcements make the list of fundamental events this month to watch? Well, most banks, but the most important are:

Federal Reserve (FED)

Responsible for maintaining the value of the US dollar, the FED, through the Federal Open Market Committee (FOMC) makes the decisions. Being the most heavily traded currency in the Forex market, the US dollar, the FOMC statement is at the top of all fundamental events this month.

Right now, the interest rate in the US is 0.75%, which is higher than what it was last year. For most of 2016, the interest rate was kept at 0.50%, until the FOMC announced a raise on the 14^th of December 2016. This strengthened the US dollar and even helped improve US stocks and indices like the Dow Jones and S&P 500. The previous meeting was held on the 1^st of February this year, and the FED kept the rates at 0.75%.

It wasn’t too much of a surprise because it is rare for a central bank to hike interest rates in back-to-back meetings, so the US dollar didn’t lose too much of its value. Now, most people are betting the FED will raise interest rates following several statements by FOMC members. If they do raise interest rates, the US dollar will rise in value against all other currencies, so this event is definitely one to watch.

Bank of England (BoE)

The BoE is choosing to maintain the status quo, and this is possibly because of Article 50’s implications, and they don’t want to rock the boat. Nevertheless, their decision on the 16^th of March will be one to watch. The general consensus is that the rate will remain the same at 0.25% because inflation is still down, but the BoE may have to raise the rates later this year.

European Central Bank (ECB)

On the day after tomorrow, the 9^th of March, the ECB will hold a meeting to inform us about their interest rate decision. The euro is obviously a crucial currency and this decision will be at the top of this week’s fundamental events this month. The rates have remained unchanged at 0.00% through 2016, and on the 19^th of January the ECB still left it there. This caused a dip in the value of the euro, but it recovered.

Furthermore, statements at the previous ECB meeting showed that they were still dovish, and that the rate would remain unchanged once again. Given that this is very likely; we may see the euro lose value this week against other currencies.

Other central banks to watch include the Bank of Japan (BoJ), whose meeting will be on the 16^th of March and the People’s Bank of China (PBoC) which is unpredictable but whose statements are important nonetheless.

General elections

Our experience with last year’s US general elections have proven that these are important fundamental events this month, if any.

Most of the elections will be held in Europe, and the countries involved will be the Netherlands, on the 15^th of March and Bulgaria on the 26^th of March. Depending on whether the countries pick conservative or liberal leaders, this will change the value of the euro. However, more impactful elections will be seen later in France and Germany which are much bigger players in the Eurozone.

Away from Europe, Hong Kong will vote for their Chief Executive on the 26^th of March. Hong Kong is a crucial partner with China, the US, Singapore and Japan thanks to its thriving service industry. Therefore, these elections will affect the Forex markets in some way.

Other fundamental events this month

Prime Minister Theresa May promised to trigger Article 50 by the end of March. There have been some hurdles, but we’re hoping to see the Brexit finally starting to happen.

Away from the politics, there will be more fundamental events this month including the crude oil inventories from the US. The announcement will affect most oil exporting countries such as Canada, but also the US itself. We’re also waiting for the official OPEC meeting in May, but there have been rumblings of supply cuts by OPEC nations.

Then, there are the usual announcements on unemployment, inflation, housing and manufacturing; all which will also be fundamental events this month worth watching. The above, though, those are the big ones you absolutely should not miss.