The first week of March saw continued weakness in the U.S. Dollar, driven largely by ongoing uncertainty surrounding tariffs and the geopolitical situation in Ukraine. The tariff debate is unlikely to reach a resolution anytime soon, meaning market volatility linked to trade policy is here to stay. For those trading USD who weren’t around during Trump’s first presidency, expect tariff-related shocks to be a recurring theme.
Looking ahead, the second week of March is set to be eventful, with both political developments and key economic data releases shaping market movements. While political announcements—particularly from the White House on trade policy—are unpredictable, economic indicators will provide clearer direction for currency markets.
Monday: German Trade Data and Euro Performance
The week starts with German trade balance data and industrial production figures. Both are expected to come in stronger than last month, potentially providing support to the Euro, which has held firm despite broader economic concerns in the Eurozone. If the data meets expectations, EUR/USD could see further strength, especially if the Dollar remains under pressure from trade-related uncertainty.
Wednesday: U.S. Inflation and Bank of Canada Rate Decision
One of the key events this week will be U.S. inflation data, which is forecasted to show both core and headline inflation declining. Current estimates suggest core inflation will come in at 0.3%, while headline inflation drops to 2.9%. If these figures hold, it will reinforce the narrative that the Fed doesn’t need to rush into rate cuts, providing some short-term support for the Dollar.
However, the impact of tariffs remains a concern—while falling inflation is positive, new trade restrictions could push prices higher again, making inflation trends less predictable.
Later in the day, the Bank of Canada is expected to cut interest rates by 25bps to 2.75%. If confirmed, this could weaken the Canadian Dollar, making USD/CAD a pair to watch for potential volatility.
Thursday: U.S. Jobs Market and Producer Prices (PPI)
Thursday brings a heavy U.S.-focused data slate, with jobless claims and PPI (Producer Price Index) figures. Recent trends suggest the U.S. labor market is softening, and analysts expect this pattern to continue this week.
Lower consumer inflation (CPI) often leads to lower producer inflation (PPI), as businesses adjust their pricing strategies. If PPI data confirms this trend, it could boost confidence in the Fed’s inflation control efforts and provide some relief for the Dollar, but much will depend on the broader tariff-related uncertainty.
Friday: Key UK Data – Will Sterling Hold Firm?
For Sterling traders, Friday is the most important day of the week, with several key UK economic releases scheduled, including trade balance, GDP, and industrial/manufacturing production data.
The GDP figures are expected to show month-on-month growth slowing to 0.1%, which could weigh on Sterling if markets interpret it as a sign of economic stagnation. However, industrial and manufacturing production are forecasted to improve, which may help offset any negative sentiment from GDP numbers.
If GDP data disappoints, GBP could weaken into the weekend, especially if paired with a strong Dollar rebound from U.S. data releases earlier in the week.
Final Thoughts
This week is shaping up to be a mix of political uncertainty and key economic releases, with the Dollar, Euro, and Sterling all in focus.
- USD traders: Watch Wednesday’s inflation data and any tariff-related announcements that could shake confidence in the Greenback.
- EUR traders: German trade data could offer short-term strength, but Eurozone economic concerns remain a risk.
- GBP traders: Friday’s GDP release will be a key indicator of UK economic resilience—a weak reading could see Sterling fall into the weekend.
With markets remaining unpredictable, timing is key for currency transactions. If you have upcoming FX requirements, reach out for insights on the best strategy to navigate this volatile environment.