Morning Market Review for 18.03.2025

EUR/USD

The euro has been mixed in the EUR/USD pair during the Asian session, consolidating near 1.0910. The day before, the instrument once again demonstrated quite active growth, but was unable to update the local highs formed last week. The reason for the "bullish" dynamics was macroeconomic data from the US, according to which Retail Sales volumes in February increased by 0.2% in monthly terms, recovering from –1.2% in the previous month with a forecast of 0.7%, and slowed down from 3.9% to 3.1% in annual terms. The figure excluding autos rose by only 0.3%, compared with expectations of 0.5%, while in January it showed a decline of 0.6%. American investors also noted the sharp drop in the NY Empire State Manufacturing Index in March from 5.7 points to –20.0 points, while analysts had expected –1.9 points. Today, at 12:00 (GMT+2), the Centre for European Economic Research (ZEW) will release business sentiment data: the German Economic Sentiment index in March could rise from 26.0 points to 48.1 points, and the Economic Sentiment index for the eurozone as a whole could rise from 24.2 points to 39.6 points, while the Current Situation index in Germany, according to preliminary estimates, will improve its negative dynamics from –88.5 points to –80.5 points. In the US, today, at 14:30 (GMT+2), the February statistics on the dynamics of Housing Starts will be presented, and tomorrow, at 20:00 (GMT+2), the results of the US Federal Reserve meeting will be announced: currently, markets are not counting on a softening of monetary parameters, but the regulator’s position following the publication of the follow-up statement is still expected to be more loyal to a reduction in the interest rate.

GBP/USD

During the Asian session, the pound is consolidating in the area of local highs of early November (1.2970): the activity on the market remains restrained, as investors prefer to wait for new drivers for movement of quotes. The results of the US Federal Reserve meeting will be announced tomorrow, at 20:00 (GMT+2). The regulator is currently expected to maintain the interest rate at 4.50%, despite concerns about the prospects of the national economy. In addition, markets are concerned about President Donald Trump's "hawkish" trade policies, which are already reflected in the dollar's dynamics and could lead to more fundamental changes in the global environment in the future. In April the White House is preparing to introduce retaliatory higher duties for all trade partners that in one way or another limit the import of American goods. This could also affect Great Britain, which has previously asked for exceptions to be made for it in the matter of steel and aluminum exports. After cutting by 25 basis points to 4.50%, market consensus is that the Bank of England will keep rates on hold at Thursday's meeting, reaffirming the "gradual and cautious" approach to policy adjustments that Bank of England chief Andrew Bailey has repeatedly stressed, highlighting ongoing economic uncertainty both domestically and globally. At least two of the nine participants at the upcoming meeting are expected to vote in favor of a further 25-basis-point cut in borrowing costs. Also, on Thursday, at 09:00 (GMT+2), the UK will release data on the labour market: it is expected that Claimant Count in February will decrease from 22.0 thousand to 7.9 thousand, the Average Earnings Excluding Bonus in January will add another 5.9%, and Average Earnings Including Bonus will adjust from 6.0% to 5.9%, while the Unemployment Rate will be fixed at 4.4%.

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Publication date:

18 March 2025 - 11:04 (GMT)

The New Zealand dollar is mixed in NZD/USD trading during the Asian session, consolidating near 0.5820 and local highs from December 10. The instrument demonstrated quite active growth the day before, while macroeconomic statistics from New Zealand remained neutral. Business NZ's services purchasing managers' index (PSI) fell to 49.1 points from 50.4 points. At the same time, data from China supported the quotes: Industrial Production volumes in February increased by 5.9% after 6.2% in the previous month, with a forecast of 5.3%, and Retail Sales accelerated from 3.7% to 4.0%. In turn, statistics from the US the day before reflected a slowdown in Retail Sales in February from 3.9% to 3.1% year-on-year and growth of 0.2% after –1.2% with expectations of 0.7% on a monthly basis. In addition, investors also noted the sharp drop in the NY Empire State Manufacturing Index in March from 5.7 points to –20.0 points, while analysts had expected –1.9 points. The results of the US Federal Reserve meeting will be announced tomorrow, at 20:00 (GMT+2): markets are not currently expecting a cut in interest rates from 4.50%. New Zealand will release fourth-quarter 2024 Gross Domestic Product (GDP) data on Thursday, with analysts expecting an annual contraction from –0.3% to –1.4%, and a quarterly increase of 0.4% from –1.0%.

The US dollar is showing a noticeable gain in the USD/JPY pair in Asian trading, developing a fairly active "bullish" momentum formed last week. The instrument is testing 149.75 for a breakout, updating local highs from March 5. At the same time, the macroeconomic background from the US remains mixed: Retail Sales volumes in February increased by 0.2% in monthly terms, recovering from –1.2% in the previous month with a forecast of 0.7%, and slowed down from 3.9% to 3.1% in annual terms. American investors also noted the sharp drop in the NY Empire State Manufacturing Index in March from 5.7 points to –20.0 points, while analysts had expected –1.9 points. The results of the US Federal Reserve meeting will be announced tomorrow, at 20:00 (GMT+2): markets are not currently expecting a cut in interest rates from 4.50%. Meanwhile, the yen's position is under pressure today from weak data on Tertiary Industry Index, which fell by 0.3% in January after increasing by 0.4% in the previous month, while analysts expected –0.1%. Tomorrow, the Bank of Japan will hold its meeting, and February macroeconomic statistics on foreign trade and January data on Industrial Production will be published. Markets are also not expecting changes in monetary policy parameters from the Japanese regulator: the interest rate is likely to remain at 0.50%, but monetary authorities may signal an increase in the second half of this year.

The XAU/USD pair holds near fresh record highs at 3016.00 during the Asian session. The growth of the instrument is facilitated by the rather weak position of the American currency, as well as concerns about the deterioration of the global economy as protectionist sentiments intensify in various countries. Macroeconomic data from the US released yesterday reflected that Retail Sales volumes in February increased by 0.2% in monthly terms, recovering from –1.2% in the previous month with a forecast of 0.7%, and slowed down from 3.9% to 3.1% in annual terms. The figure excluding autos rose by only 0.3%, compared with expectations of 0.5%, while in January it showed a decline of 0.6%. American investors also noted the sharp drop in the NY Empire State Manufacturing Index in March from 5.7 points to –20.0 points, while analysts had expected –1.9 points. This week, the market will focus on the results of the meetings of the US Federal Reserve, the Bank of Japan and the Bank of England. At the same time, analysts do not expect any of the regulators to change the current parameters of monetary policy, but updated comments from their heads may significantly affect the market dynamics.