It promises to be a bumpy ride this week as we have a calendar packed with central bank meetings and rate decisions, a semi-annual Congress appearance from the most powerful banker in the world, and the latest US non-farm payrolls report which comes after the scarcely believable 517,000 job gains in January.

Fed Chair Powell speaks on Tuesday as he appears before the Senate and after the slew of bumper economic releases which have seen upside surprises across the board. Any hints he gives as to whether he thinks the Fed should deviate from 25bp rate hikes going forward will move markets. He could also imply that the new FOMC dot plot to be published in a few weeks will need to go higher to combat sticky core inflation. This twice-a-year event has seen Fed Chairs in the past give views on the outlook so it will be a key focus for markets.

If an economist tells you that they know what the headline US non-farm payroll print will be, it’s fair to say that they will be guessing 100%! After the prior blockbuster half a million reading, a consensus print around 200,000 is expected, but not with a lot of certainty. Other job surveys point to a much lower figure than in January, with seasonal adjustments and weather-related issues accounting for the January blowout. We will be on the lookout for revisions to that number and increased volatility around the jobs release.

Central bank decisions kick off with the RBA who are expected to continue their hiking cycle with a 25bp rate rise which will take the policy rate to 3.6%. Concerns about high inflation linger but local data has surprised to the downside recently. A day later should see the Bank of Canada stand pat which means leaving its rate unchanged at 4.5%. The economy remains overheated despite the recent downside surprise in Q4 GDP. Both AUD and CAD may be governed more by events in China if consensus prevails at these meetings.

Finally, Friday brings the last Bank of Japan meeting under the stewardship of Governor Kuroda. There is much speculation about if and when the BoJ might move away from its uber-dovish policy stance. Yen price action will directed by any hint at policy normalisation with the impact felt by all asset markets when that moment does come around.

Major risk events of the week

07 March 2023, Tuesday:

-RBA Meeting: Consensus sees the bank raising rates by 25bps to 3.6%. The RBA will remain focused on its task of returning inflation to the target zone of 2-3%. But it will be mindful of the recent soft Q4 GDP data which revealed a weak consumer despite strong nominal wage gains. AUD is hovering just above key support at 0.6681. The 200-day SMA above at 0.6789 could cap the upside.

–Fed Chair Powell at the Senate: Jerome Powell’s appearance before the Senate Banking Panel will be closely watched for any clues as to a possible re-acceleration in the Fed’s tightening cycle. Has he changed his view on financial conditions? Will any hints around the March FOMC economic projections disappoint USD bulls?

08 March 2023, Wednesday:

-Bank of Canada Meeting: Policy will be left unchanged, having lifted rates to 4.5% after a 25bp increase at its January meeting. Data since then has seen GDP slow and inflation undershoot expectations, though job gains have continued at pace. Last week’s USD/CAD doji candle hinted at indecision after the break to the upside. Resistance is at 1.3665.

10 March 2023, Friday:

-Bank of Japan Meeting: Expectations are for the BoJ to stand pat on policy changes. It is also unlikely to move away from the negative rate framework with YCC. This is due to inflation likely peaking in January. Will policy normalisation be delayed again? Does Governor Kuroda throw a last surprise and tweak policy? USD/JPY has failed to break above its 200-day SMA and 100-day SMA at 137.29 and 136.61.

-US Non-Farm Payrolls: The headline print is forecast around 215k, and unemployment to remain at the historic low of 3.4%. Wage growth is seen staying benign at 0.3%. Seasonal adjustments and warmer weather likely caused the bumper 517k job gains in January. That means some of the strength should be reversed.

-Canada Jobs: Analysts expect employment to rise by 10,000. This comes after the huge 150,000 print in January, due in part to seasonal factors.  The jobless rate is seen remaining at 5% for a third month.