Week Ahead – March Geopolitics Madness begins with China

Currency volatility is about to enter high gear in March, as a US-China trade deal nears, South Asia tensions remain, Fed rate-hike expectations appear cemented, the ECB might lower their economic forecasts and Brexit will likely be extended.  The focus this week will however be heavily on China, the US nonfarm payroll number and a few key rate decisions from the Reserve Bank of Australia (RBA), ECB and Bank of Canada (BOC).

The US dollar began the trading week on a softer note after President Trump went on the attack and accused Fed Chair Powell of being someone who likes raising interest rates, loves quantitative tightening and likes a very strong dollar.  Trump’s comments about the Fed were mainly a reiteration and one of many wide-ranging topics covered at his speech at the Conservative Political Action Conference.  The President appears to be already in 2020 campaign mode and is likely going to try to control the flow of news, especially as we approach the period where we could learn more about the findings from the Mueller report.

USD – Trade Deal nears and nonfarm may not budge the Fed

China – Policy Summit to unveil economic growth target and reform plans

STOCKS – Earning results to show how strong is the consumer

GOLD – Remains vulnerable as geopolitical risks ease and dollar refuses to break

OIL – Crude became overbought by hedge funds


Optimism is very high for the US and China to finalize a trade deal this month, but this by no means suggests that a trade deal and not an extension of talks is a certainty.  As final terms are being agreed upon, President Trump, in true ‘Art of the Deal’ fashion increased his wish list to include the immediately removal of all tariffs on agricultural products.  The next step is for both sides to make more progress to warrant a mid-March meeting between Presidents Xi and Trump.

The key US economic report for the week will be the non-farm payrolls report.  The US economy is a mixed picture, with the labor market being the best performing part.  Current expectations are for US employment to comeback to earth, down from the 304,000 reading in January to 185,00 jobs created for the month of February.  The range of estimates is 120,000 to 250,000, which highlights the robust expectations for the report.  Even if we see a solid report, we probably will not see a strong shift of expectations for the rate hikes to become the next move.  The risk of a downward revision for January and a soft report however could firmly cement a meaningful rate cut expectation in the Fed funds futures market.


The biggest event of the trading week could be China’s National People’s Congress summit.  The annual policy address will unveil China’s economic growth target, policy priorities, plans for reform and stimulus measures.  The world’s second-largest economy is in the middle of a trade war and their stimulus measures may mainly focus on supporting Chinese consumption.   The markets will monitor closely to see if their policies will also help European exporters.

High-beta currencies may react strongly to China’s pro-growth measures, fiscal stimulus and further rate cuts.  With most of the advanced economies either expected to see their central banks to resume easing or remain on hold for while, significant easing from China could be what it is needed to help deliver a fresh round of strong risk appetite.


Brick-and-mortar retailers will headline this week’s earnings results and the latest take on the consumer will closely be watched on Wall Street.  Target, Kohl’s, Ross Stores, Dollar Tree, Kroger and Costco all report this week, alongside with cloud-giant Salesforce.

With over 90% of the S&P 500 stocks now trading above their 50-day SMAs, we could see momentum remain in place, but the current rally appears to have hit a wall.  The general take on this earnings season is that results came in better than many feared, with most companies expecting softness in first half of the year, followed by a strong finish.  Markets are always forward looking but it may be difficult to see this rally remain in place without a pullback.


Gold prices appear to be in the danger zone after last week’s selloff broke below the $1,300/oz level.  A better than expected GDP result from the US along with high optimism a trade deal will be done with the two largest economies in the world has deteriorated demand for safe-haven trades.  The precious metal could see a reprieve on strong stimulus announcements from China and dovish tones to the ECB, RBA and BOC rate decisions.  A complete yellow metal recovery to last week’s losses however may not occur despite strong stimulus measures and dovish rate decisions if we do not see the dollar break.


Crude prices were ripe for a pullback as bullish bets became skewed to one side.  The ICE Futures Europe data for the week ending on February 26th showed hedge funds raised their wagers for an eight-consecutive week, a potential sign of being overbought.  In addition to the crowded trade, supply-side concerns are starting to grow as the market’s have fully priced in OPEC’s production cuts to last until the end of the year.  With US production potentially stabilizing, last week’s data hit a 9-month low, any major selloff however could be short-lived.

Rate Decisions

The Reserve Bank of Australia (RBA) is unanimously expected to keep policy steady at 1.50% . How concerned the RBA is with the housing sector could unveil clues as to whether they are going to start to have a more accommodative stance. The Bank of Canada (BOC) is also expected to keep rates unchanged at 1.75% and they will they likely ease up on their hawkish outlook following softer inflation and the recent deterioration in GDP and retail sales. The ECB will keep policy steady unchanged as inflation continues to struggle. They will downgrade their inflation forecasts and expectations for a rate hike could fall to 2020.

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.