A collection of positive and negative news that affects the foreign exchange market

In the foreign exchange market, various news always affects the trend of the currency, and investors need to pay close attention to the latest developments in order to make informed decisions. The following is a summary of the positive and negative news that affected the foreign exchange market on March 21.

Central Bank Policy Trends

Federals, the Federal Reserve maintained interest rates unchanged in the FOMC statement issued on March 19, and the median estimate of the dot chart shows that a total of 50 basis points will be cut this year. At the same time, the Federal Reserve lowered its expectations for US economic growth. This decision has changed the market's expectations for the US dollar, and the US dollar index has surged and fell. Its measures to keep interest rates unchanged have alleviated the upward pressure on the US dollar due to the expectation of interest rate hikes to a certain extent, and are a relatively positive factor for other currencies. Assets such as gold, which are denominated in US dollars, will also be affected by this change in the US dollar. The recent fluctuations in gold prices are closely related to the Federal Reserve's decisions.

For the European Central Bank, the European Central Bank Management avatradescn.committee stated that increasing military spending may not necessarily slow down the pace of interest rate cuts. This statement triggered further speculation in the market about the direction of the European Central Bank's monetary policy. The focus of the market is on the future pace of interest rate cuts in the European Central Bank. If the pace of interest rate cuts slows down, the euro may gain some support; on the contrary, if interest rate cuts accelerate, the euro may face downward pressure.

The Swiss National Bank is expected to cut interest rates by 25 basis points, and interest rates are again down to negative. If interest rate cuts are implemented, the Swiss franc may be under depreciation pressure. In the foreign exchange market, this will affect the exchange rate between the Swiss franc and other currencies. Investors need to pay attention to the trends of the relevant currency pairs.

Bank of England, traders lowered their bets on the Bank of England's interest rate cut in May, believing that there is 60%The probability of this was 70%. UK interest rate futures show that by the end of 2025, the Bank of England will cut interest rates by 43 basis points, avatradescn.compared with 52 basis points before the Bank of England’s interest rate resolution. Changes in market expectations for the Bank of England's interest rate cut will affect the trend of the pound. The bulls of the pound are temporarily suspended, and the exchange rate of the pound against the US dollar fluctuates under the influence of relevant news. On March 20, the pound/USD fell below 1.3000.

Economic data performance

In the United States, consumer credit in January was US$18.08 billion, expected to be US$14.5 billion, avatradescn.compared with the previous value of US$40.847 billion. Changes in consumer credit data reflect the borrowing ability and willingness of American consumers and have a certain impact on the consumption level of the US economy. At the same time, the U.S. Department of Labor’s first unemployment benefits data showed that the number of applicants fell to 221,000 in the week ended March 1, lower than the market expectations of 235,000, which provided some support for the US dollar. Labor market data is one of the important factors affecting the trend of the US dollar. The low number of first-time unemployment benefits indicates that the US job market is relatively stable, which is conducive to the strong performance of the US dollar.

In addition, U.S. mortgage rates rose for the second consecutive week to 6.67%. Rising mortgage interest rates may curb demand in real estate markets, which in turn has a chain reaction to the U.S. economy and affect the performance of the U.S. dollar in the foreign exchange market.

Geopolitics and Trade Situation

In terms of geopolitics, the United States imposes new sanctions on relevant entities in Iran, which has affected the situation in the Middle East. As an important crude oil producing area in the world, the instability of the Middle East may lead to fluctuations in crude oil prices, which will in turn affect the currency exchange rates of relevant countries. For example, the Iranian currency Riyal may face greater pressure due to sanctions, and for countries relying on Middle East crude oil imports, their currencies may also be indirectly affected by potential changes in energy costs.

In terms of trade, European and American tariff negotiations are in a deadlock, which puts the euro/dollar on the rise. Tensions in trade relations are not conducive to the recovery of the euro zone economy, and thus have a negative impact on the euro exchange rate. The Bank of Canada governor hinted that the way the Bank of Canada sets key interest rates will change as trade uncertainty with the United States makes long-term forecasts more difficult, which will also have an impact on the performance of the Canadian dollar in the foreign exchange market.

The above content is all about "【AvaTreade】: Collection of positive and negative news that affects the foreign exchange market". It was carefully avatradescn.compiled and edited by the Avatrade foreign exchange editor. I hope it will be helpful to your trading! Thanks for the support!

Due to the author's limited ability and time constraints, some content in the article still needs to be discussed and studied in depth. Therefore, in the future, the author will conduct extended research and discussion on the following issues: