- JP225 breakout on horizon?
- CN50 respects bullish channel
A wave of key central bank decisions may present fresh trading opportunities in the week ahead!
Watch out for the Federal Reserve (Fed), Bank of Japan (BoJ) and Bank of England (BoE) among other heavyweights:
Monday, 18th March
- CN50: China industrial production, retail sales, fixed assets
- EUR: Eurozone CPI
- JPY: Japan machinery orders
Tuesday, 19th March
- AU200: RBA rate decision
- JP225: BOJ rate decision
- CAD: Canada CPI
- EUR: Germany ZEW survey expectations
Wednesday, 20th March
- CN50: China loan prime rates
- EUR: Eurozone consumer confidence
- GBP: UK CPI
- RUS2000: Fed rate decision
Thursday, 21st March
- AUD: Australia unemployment
- JPY: Japan trade, Jibun Bank manufacturing PMI
- UK100: BoE rate decision
- CHF: SNB rate decision
- EUR: Eurozone S&P Global PMI’s, Germany manufacturing PMI
- USD: US conference Board leading index, initial jobless claims
Friday, 22nd March
- JPY: Japan CPI
- NZD: New Zealand trade
- CAD: Canada retail sales
- EUR: Germany IFO business climate
- USD: Atlanta Fed President Raphael Bostic speech
Our focus falls on 5 indices which could be rocked by 5 central bank announcements:
1) RUS2000 braced for Fed
The RUS2000 which tracks the underlying Russell 2000 Index could see heightened levels of volatility due to the Fed rate decision.
This index is composed of smaller stocks that are more volatile compared to those in large-cap indexes.
In fact, since the start of H2 2023 the RUS2000 has shown the most sensitivity on Fed rate decision day when compared to the S&P500, Nasdaq 100, S&P400, and even Dow Jones!
Markets widely expect the Fed to leave rates unchanged in March, so much focus will be on the updated dot plot and Powell’s press conference for clues on rate cut timings.
Looking at technical prices are under pressure on the H4 charts with support found at 2015 and resistance around 2090.
2) AU200 waits on RBA
Despite Friday’s rebound, the AU200 which tracks the underlying ASX 200 Index is en route to ending this week on a negative note.
Nevertheless, the index could be supported by the upcoming RBA meeting in the week ahead.
The central bank is expected to leave rates unchanged at 4.35% so it’s all about the policy statement for insight into the RBA’s next move. Ultimately, any hint around rate cuts down the road may keep the index buoyed.
Traders are currently pricing in a 64% probability of a 25 basis point RBA cut by June 2024.
Looking at the charts, a technical rebound could be brewing with a breakout above 7765 bringing bulls back into the game, opening a path back towards the all-time high.
3) JP225 breakout on horizon?
Things could get wild for the JP225 as expectations mount around the BoJ ending its negative rates.
Note: The JP225 tracks the Nikkie 225 index and tends to weaken when the Yen strengthens, vice versa.
Markets are currently pricing in almost a 60% probability that the BoJ will scrap its negative rates next week, with the probability of a hike in April jumping to 70%.
Should the central bank make a move next week or confirm that rates will be hiked in April, this may trigger a potential breakout on the JP225. Focusing on the charts, support can be found at 38300 and resistance at 39250.
4) CN50 respects bullish channel
It is a big week for the CN50 due to key economic indicators from China and the loan prime rate decision from Chinese banks which is announced by the PBoC. The CN50 tracks the benchmark FTSE China A50 Index and has gained over 14% since the low back in January 2024.
Note: China’s central bank left its key policy rates unchanged today.
The index is likely to be influenced not only by fundamental forces but technical factors. Prices are bullish with further upside on the cards beyond 12240.
5) UK100 set for big move?
After swinging within a range on the weekly charts, the UK100 which tracks the underlying FTSE100 index could be preparing for a breakout.
This may be triggered by the incoming UK inflation data and BoE rate decision in the week ahead.
Markets widely expect the BoE to leave interest rates unchanged at 5.25% for the fifth straight meeting, so all attention will be on the policy statement and how many MPC members voted to cut rates. Given how this event is likely to impact the pound, it may be reflected in the UK100.
Note: When the pound appreciates, it results in lower revenues for FTSE100 companies that acquire sales from overseas, pulling the UK100 lower as a result. The same is true vice versa.
Regarding the charts, a solid weekly close above 7740 could open a path back towards 7930. Should this level prove to be reliable resistance, prices may slip back towards 7575.
