 Welcome traders to another tick mill weekly market outlook for week commencing the 14th of March with me Patrick Munnerley In the week ahead, the focus is firmly going to be on central banks and whether or not they are going to stick to the script with respect to interest rates Heights and focusing on inflation over war concerns. We are seeing some moderately positive developments coming out of Eastern Europe with Russia and Ukraine Hopefully seeking diplomatic channels to resolve issues there so in the US this week It's really going to be about the Federal Reserve who looks set to raise interest rates with consensus firmly settled on a 25 basis points move After Fed chair Jerome Powell stated that it's what he would propose and what he would support It may not be a unanimous decision with a strong likelihood that two federal open market committee members will vote for a more aggressive 50 basis points hike Given inflation is already close to 8% and it's soon set to test 9% at so time when the economy is growing creating jobs in a significant number However the uncertainty created by Russia's invasion of Ukraine is likely to lead the majority of the committee backing Powell's motion They will also be releasing their updated dot-plot diagram of individual projections for interest rates Currently the median is 3.25 basis points hikes in total by year ends But it is likely to end up being much closer to the 6 hikes markets are fully discounting after this update However the Fed is likely to emphasize a need to be nimble given the uncertainty and geopolitical backdrop While acknowledging that surge in commodity prices not only poses an upside risk for inflation but also a downside risk for growth In terms of the economic data focus will be on retail sales and industrial production this week Auto sales fell by around 7% in February so this is quite a bit of a drag And will mean overall positive growth will be difficult to achieve Nonetheless even if the sales are flat on the month the total value of retail spending is going to be towards the 24% higher than February 2020 When Covid hits I'm expecting a greater weighting of spending to move towards services in coming quarters But with hassle finances looking solid and wages rising this does not mean that we can expect retail sales to fall But retail production will be interesting given the surge in oil and gas prices Rig counts are rising in response and the government is likely to become increasingly willing to permit drilling To ease the financial pain for households From a technical perspective the dollar index traded up to the 99.20 monthly projected range resistance So I'm looking for consolidation now and whilst we hold above the 98 handle We're looking for a push through to test the 100 level and ultimately we're looking for a test of the 100.75 level Which is the 78.6% corrective level versus the 2021 decline From there we're watching for bearish reversal patterns to engage on the short side Looking at the minimum for a retest of the internal projected sending trend like sport coming around 98.40 Looking from get through there then we look for a move down into monthly projected range support And the channel support back down to 96.60 In the Eurozone this week's data will be about industry but only covering January and February With economic developments so driven by the war that Ukraine at the moment these production and trade figures Will be of little help to give direction to markets Information to be taken from them is that the industrial production in January likely continued its rise thanks to a German rebound Some manufacturing was showing strength ahead of the war The trade data out on Friday is nominal and currently dominated by commodity price developments Hardly relevant for the outlook for direction on the Eurozone economy We really want to look at the geopolitical and market developments at the moment So from a technical perspective the Eurodollar tested monthly projected range support at 108.40 That's held there for now as any corrective moves are capped by the trend line resistance coming in at the 110.70 level We look for bearish reversal patterns to engage on the short side Looking for a move back down through the prior cycle lows here at 108 On route to a test of the S3 there at 106.60 And the projected descending trend line support coming in at 106.20 At this stage it will really take a close back through the 111.50s To suggest that we are going to move higher and test projected descending trend line resistance coming in at 113.60s Moving to the UK Markets have concluded that the higher energy prices that have resulted from war in Ukraine Will see the Bank of England double down on its tightening plans In the short term investors are probably correct And I'd expect that the Bank to hike rates for a third time this week And probably again in May Policymakers have made it abundantly clear that they want to get some preemptive tightening done To mitigate their concerns about higher inflation rates becoming more sustained However I suspect that the Bank will opt for another 25 basis points rate rise this week Rather than a larger 50 basis points move While 4 out of 9 policymakers voted for such a move back in February The remainder of the committee indicated that they worried such a move would simply add further fuel To market interest rate expectations Markets are once again pricing 6 rate hikes this year And comments from officials have offered some modest pushback against those expectations I think that we are probably looking after a couple more hikes The committee is likely to pause and put a greater emphasis on the deteriorating growth backdrop after all Such a sharp rise in oil and gas prices is more likely to be medium term disinflationary Even if it keeps headline inflation rates higher this year From a technical perspective still getting very close to our equality objective At the 130 level as we are supported above 129.60 I'm watching for bullish reversal patterns to engage on the long side Looking for a minimum three way corrected move back into the 130 to 70s At this stage it would take a close through the projected trend channel support 129.50 to suggest further down side Initially looking for the S3 pivot there at 128.60 So moving now to Australia The chart updates here Apologies there we have a small issue with updating the chart So we are now looking at Australia Coming into Tuesday we get the Q1ACCI Westpac business survey activity is likely to be Boosted from Delta reopening but there are supply Headwinds are likely to remain an issue for activity We also get the RVA minutes which should provide more colour to the RVA Boards deliberations and then heading into Wednesday We get the Fed Westpac MI leading index OmriKarm and Ukraine turbulence are likely to hit that print Last time that was a 0.4% We also get February overseas arrivals preliminary Looking for border reopening to the pre-COVID Aggregation 1.8% month over month And finally then winding up The data for Australia on Thursday is the February employment Looking for 40k pre-dating of floods Means that we should see a solid rise in employment Also looking for the employment rate to hold at 4.1% Hours worked and a decline in unemployment Should keep that print positive And then Q3 population estimates Q3 Delta hit could see a dip in the annual contraction there And we finish up with an RVA bulletin RVA research articles will be released on Thursday So from a technical perspective The Aussie dollar tested the yearly pivot And we are now looking for another leg to the downside To test this internal trend line support And the monthly projected range support coming in at 71.90 If we take that out on a closing basis We look for a further extension to the downside To test the 71 level as the next downside objective Through there and we'll be looking for a move down to the 69.90 At this stage it would take a close back through 74.40s to suggest further upside Looking for a test of the 75.50s And rounding out our review this week We are looking at Japan Wednesday we're going to get in industrial production Funnel estimates, supply issues Are likely to remain material headwind Last time out was a negative 0.12% print Thursday we get Japan machinery orders Looking for a negative 2% print there OmriCon likely to restrain capital investments And then we round out the week in Japan on Friday February CPI looking for a 1% print there Inflation really near pre-pandemic levels Wage growth is going to be a key focus From a technical perspective The dolly end is testing our equality objective And the projected ascending trend line resistance Coming in at the 1770s I'm looking for bearish reversal patterns here To engage on the short side Initially looking for a move back into the 116.30s If we can get through there We then look for a test of the monthly projected range Sport, 114.80s And below there we have this Sending trend line support coming in At the 114, just ahead of the 114 level At this stage it would take a close Through the ascending trend line resistance Here to suggest further upside To test the R3 pivot here at 118.35s And that concludes the weekly market outlook For a week commencing 14th of March As always trade, let's plan the trade And trade the plan The most important lead manager risk Until next week, thanks very much