Bannockburn Global Forex Drivers for the month ahead February 28, 2022 View Online Economic Calendar March 1: Reserve Bank of Australia March 1: US President’s State of the Union Address March 2: Bank of Canada March 2: Eurozone flash CPI March 2: OPEC+ Meeting March 4: US Employment Data March 9: South Korean Presidential Election March 10: European Central Bank March 10: US CPI March 13: Colombian Parliamentary Election March 15: UK Employment Data March 16: Federal Reserve March 16: Central Bank of Brazil March 17: Bank of England March 17: Central Bank of Turkey March 18: Bank of Japan March 18: Central Bank of Russia March 23: UK CPI March 24: Bank of Mexico March 24: Central Bank of Norway March 2022 FX Outlook March is a pivotal month. The US and Canada will join ranks of countries raising interest rates. The Bank of England will not only hike rates again, but it will begin allowing its balance sheet to shrink by not reinvesting the proceeds of GBP28 bln of maturing bonds it holds. The ECB is expected to provide fresh forward guidance of its asset purchases. Given the agreed upon sequence, it will likely point to the first rate hike in late Q3 or early Q4. After a slow start of the year, growth in the major economies appear to be picking up and price pressures have not peaked. Still, the base effect suggests core rates may begin easing in March/April, but the new highs in energy, grains, and edible oils warn headline inflation may be stickier. In Europe and North America, the Omicron wave has crested, but in parts of Asia, including Hong Kong and China, it still is a social and economic challenge. At the same time, the supply chain disruptions are easing in some sectors and the delivery-times are improving in general. Russia’s invasion of Ukraine was well signaled by US intelligence, but the markets still reacted dramatically. In the coming weeks, the extent of sanctions on Russia will be better understood. Thus far, officials have stopped short of taking action that would have severe domestic costs while asphyxiating the Russian economy, like banning the purchase of its oil and gas. Spurred in part by US sanctions, real and threatened, Putin has spent the last decade de-dollarizing. Between the central bank’s reserve and the sovereign wealth fund, Russia has a nearly $1 trillion cushion that will help it absorb the coming financial shocks. More broadly, the economic risks Russia’s invasion may be to lift prices and dampen growth. Click here for the full monthly outlook Bannockburn's GDP-weighted currency index rose about 0.3% in February as the currencies tended to have appreciated against the dollar. The Chinese yuan (21.8%) and euro (19.1%) have the most weighting after the US dollar (31%) in the index. They rose by 0.7% and 0.3% respectively. The strongest performer in the index was the Brazilian real (2.1% weighting) with a 3.0% gain, followed by the Australian dollar's (2.0% weighting) 2.25% increase. The weakest by far was the Russian ruble (2.2% weighting), which tumbled 6.75%.