March Trading Outlook

The month of March is expected to be highly active in the global financial markets, as investors brace for a slew of economic data and monetary releases that could impact the short-term outlook on equities, currencies and commodities. Below is a high level overview of major market-moving events scheduled for March. For more information, be sure to follow the Financial Calendar every day.

Friday, March 4: US Nonfarm Payrolls

Nonfarm payrolls are arguably the biggest data release of the month. US jobs data are closely tied to expectations about Federal Reserve policy, which has major implications on global markets. Nonfarm payrolls are forecast to rise by 190,000 in February following a lower-than-expected 151,000 increase the previous month. The unemployment rate is forecast to hold steady at 4.9%. Average hourly earnings growth is expected to slow to a more sustainable 0.2% pace, following a 0.5% increase in January.[1]

Tuesday, March 8: China trade data, Eurozone Q4 GDP

Although some economic calendars have listed Chinese trade figures as low-impact releases, recent history has shown the complete opposite effect. While analysts are fairly certain that imports and exports will decline further in February, the extent of the losses could trigger volatility for mainland China equities. Plummeting exports will raise fresh worries about the health of the world’s second-largest economy and whether the People’s Bank of China will continue guiding its currency lower.

Separately, Eurostat will release revised Eurozone fourth quarter GDP figures on March 8.

Thursday, March 10: ECB Interest Rate Decision, China inflation

All eyes will be on the European Central Bank (ECB) in the second week of March. ECB President Mario Draghi has vowed to do whatever it takes to guide Eurozone inflation and GDP growth toward their target levels, prompting speculation that policymakers could vote for additional monetary easing on March 10, including cutting the already negative deposit rate. Another rate cut could have dire consequences on the euro, but shore up the region’s volatile equity markets.

The Chinese government will release official CPI and PPI data earlier in the day. Consumer inflation picked up in January as a result of the weeklong New Year holiday celebrations. However, producer inflation declined for a 47th consecutive month and will remain negative for February.

Tuesday, March 15: BOJ Interest Rate Decision

A contracting economy and sluggish inflation are putting more pressure on the Bank of Japan (BOJ) to come up with additional stimulus measures to kick start the economy. The BOJ introduced negative interest rates in January in an effort to boost lending on the part of Japanese commercial banks. The policy measure has received mixed reviews, with analysts expecting additional rate cuts in the future.[2] However, it’s still unclear whether the BOJ will act in March.

Wednesday, March 16: FOMC Interest Rate Decision

The Federal Reserve’s second interest rate announcement of 2016 will take place on Wednesday, March 16. While the Fed isn’t expected to raise rates this month, the official policy statement could provide clues about the future path of rate tightening. The Fed is believed to be overly cautious in the face of mounting financial instability in the first two months of the year. However, favourable economic data at the end of February could support a more optimistic rate statement on March 16.

The March statement will also be accompanied by revised economic projections on inflation, GDP and unemployment. The Fed’s infamous “dot plot” chart of interest rate expectations will also be featured.

Thursday, March 24: US Durable Goods Orders, Japanese Inflation

Investors wishing to monitor the performance of the US manufacturing sector may want to pay attention to the official durable goods orders report. Durable goods orders spiked 4.9% in January, raising optimism that America’s manufacturing slowdown may be cooling.

Separately, Japan’s highly scrutinized inflation numbers will be released earlier in the day. Weak inflation data will keep the pressure squarely on the BOJ to stimulate the economy.

Thursday, March 31: Eurozone CPI

The final day of the month features a preliminary Eurozone CPI report for March. With Eurozone inflation falling back into negative territory in February, all eyes will be on the March numbers, which could dictate the extent of future stimulus measures.

[1] Bloomberg Business. Economic Calendar: Employment Situation.

[2] Japan Today (February 26, 2016). “Japan’s inflation falls back to zero in January.” Japan Today.

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