Monthly Forecast: March 2019

Foreign Exchange - Monthly Forecast
March 2019
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Andrew Kositkun
Andrew Kositkun
Foreign Exchange Head Trader
In last month's outlook, we touched on the dovish pivot from the Federal Reserve and highlighted it as a key driver of the USD. In short, Jay Powell confirmed a "Powell Put" by indicating that the Fed remains willing to provide policy accommodation as well as flexibility with its balance sheet normalization program. Read more...
In our last outlook, we mentioned that we remained cautiously constructive on the euro in 2019 but expected the euro to remain pressured in the near term, and the economic data has played out accordingly. Eurozone growth, which ended 2018 on a negative note, has remained weak to start the New Year. Read more...
We have been harping on Brexit as a key driver for the GBP and, with all due apologies for repetition, the month of March will be the epitome of this because of the March 29 deadline when the UK is set to crash out of the EU. Read more...
Three main themes are set to influence the JPY over the next couple of months. These are the dovish turns from the Federal Reserve that put a bearish slant on US yields, seasonal factors around Japan's fiscal year end (March 2019) and heightened concern around a global slowdown. Read more...
Since the beginning of the year, the CAD has reversed course from its weakening trend to strengthen to levels not seen since November 2018. A reversal of course in global equities to start the New Year accompanied by commodity outperformance have changed the short term dynamics in favor of the CAD. Read more...
The AUD went on a bit of a monetary policy rollercoaster this past month. Initially, the AUD strengthened as the Reserve Bank of Australia (RBA) issued a post-meeting statement that held onto the bank's "glass half full" narrative more than the market expected. Read more...
After sharply depreciating for most of last year, the CNY has been one of the top performing Asian currencies since the New Year correlating strongly with a sharp Chinese equity market recovery. This appreciation has been driven by the December trade truce with the US and subsequent positive developments in trade negotiations with President Trump announcing an extension of the imposition of further tariffs. Read more...
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This report is for general information and education only and was compiled from data and sources believed to be reliable. City National Bank does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors as of the date of the report with no obligation to update or notify of inaccuracy or change. This report is not a recommendation or an offer or solicitation to buy or sell any financial instrument discussed. It is not specific investment advice. Financial instruments discussed may not be suitable for the reader. Readers must make independent investment decisions based on their own investment objectives and financial situations. Prices and financial instruments discussed are subject to change without notice. Instruments denominated in a foreign currency are subject to exchange rate and other risks. The Bank (and its clients or associated persons) may engage in transactions inconsistent with this report and may buy from or sell to clients or others the financial instruments discussed on a principal basis. Past performance is not an indication of future results. This report may not be reproduced, distributed or further published by any person without the written consent of City National Bank. Please cite source when quoting.
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