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28.10.2015 17:40

American focus: the US dollar fell against most major currencies

The US dollar fell against major currencies as investors doubted the feasibility of investments in the US currency before the second half of the day will be announced the results of the meeting of the Federal Reserve System.

Most investors believe the Fed will keep interest rates unchanged. Some, moreover, are concerned that a series of weak economic data may reduce the tendency of the central bank to raise interest rates in the next few months. The probability of a prolonged low interest rates put pressure on the dollar, as the increase in borrowing costs would make it more attractive for investors.

"If the Fed rhetoric points to a lower likelihood of higher interest rates in the next few months, it may affect on the dollar", - said Joe Manimbo, senior market analyst at Western Union.

According to futures on a bet the Fed, market participants estimate the probability of a rate hike on Wednesday at 5%. The probability of a rate hike at the meeting on December 15-16 is 34%, although earlier this year it was above 50%.

The euro rose against the dollar by updating yesterday's high, which was related to statements of representatives of the ECB on the theme of QE. Today, the ECB's chief economist, Peter Pret refuted the view that the Central Bank carried out a program of quantitative easing does not allow the government of the eurozone countries to carry out the necessary reforms, as a result of the program the cost of borrowing is very low. Pret also said that criticism of the aggressive policy of the ECB should be thinking about what would happen if such measures were not taken. "This would lead to deflation and perhaps depression," - said Pret. Meanwhile, a representative of the ECB Hansson said that he sees no compelling reason to consider the likelihood of policy change in December, knowing what we know today. He added that bank lending is restored, and the internal economy of the eurozone is quite stable.

A slight pressure is applied to the data for Germany. The results of a monthly survey GfK showed that German consumer confidence weakened again, registering with the third monthly decline in a row, which was caused by the deterioration of economic expectations of households and willingness to make large purchases. According to the data, forward-looking consumer confidence index in November fell to 9.4 points against 9.6 points in October. Last modified in line with expectations. We also add that the index reached the lowest level since February. Meanwhile, in a statement it reported that the index of economic expectations fell for the fifth time in a row in October - up 2.9 points from 6.4 points in September. The index fell below zero for the first time since May 2013 and was below its long-term average.

Market Focus

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  • ECB's Mersch says as conditions normalise, it is unlikely that uncoventional policies will remain necessary
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