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21.03.2016 18:20

American focus: The US dollar strengthened against most major currencies

The dollar rose modestly against the euro, supported by statements by the Fed and the profit-taking by some investors. Recall, market participants began to actively sell the US currency last week after the Federal Reserve lowered its forecast for the number of rate increases in 2016. Analysts say that in the medium term the dollar will affect the signals that the Fed plans to tighten monetary policy. If politicians continue to hint that June is still possible date of the next interest rate increase, it should support the dollar.

Earlier today, the head of the Federal Reserve Bank of San Francisco John Williams said that the Central Bank may still raise rates in April and June, when economic data will provide the foundation for such a decision. "All things being equal, if we assume that all other factors remain unchanged, but the incoming data will conform to my expectations and hopes, that in April or June definitely have the potential to raise rates", - the politician said. It is worth emphasizing now traders estimate the probability of a rate hike in June of 38%.

Meanwhile, the president of the Richmond Fed Jeffrey Lacker said that inflation in the US is likely to accelerate in the coming years and will move to the target of 2% after the oil price reached the lower limit. "Inflation has recently remained weak influenced by two factors:. Lower oil and rising dollar prices, however, probably none of these factors will not always put pressure on inflation, I believe that overall inflation will increase significantly when the complete price drop. . oil Stability of the dollar will also support the further growth of inflation ", - said Lacker.

In addition, the Federal Reserve Bank of Atlanta President Dennis Lockhart said that economic data justifies the Fed's next move may already be at the April meeting. "The economy may justify a rate hike later this year, and perhaps quite soon, however, the planned course or specific yes for decisions on interest rates there.", - The politician said. He added that the economy is largely supported by growth in consumer spending, and some indicators point to the fact that inflation is moving forward at a healthy pace. In addition, he expressed confidence that economic growth in the 1st quarter rebound after a relatively weak Q4. Lockhart expects that this year the rate of increase in GDP of 2% -2.5%.

The British pound fell against 100 pips against the US dollar, updating the minimum on Friday and dropping below $ 1.4400. Initially, the pressure on the pair had the news that the British Minister for Labour Affairs and Pensions Iain Duncan Smith resigned after Britain's finance minister Osborne proposed to reduce disability. Investors believe that now Smith will take an active part in the campaign for the withdrawal from the EU, which may adversely affect the course of the pound. Also negatively affected by the data on the balance of industrial orders. In the UK, manufacturing output fell the most in six and a half years - the production volume balance fell to -15 in the three months to March. Was the lowest level since September 2009. However, enterprises expect a significant growth in the coming quarter and the corresponding survey balance was 23, the highest rate in 13 months. orders balance rose to -14 from -17 in February, in line with expectations. The balance of export orders has remained steady at -19. The survey also showed that average sales prices are likely to decline slightly in the next three months.

Reducing pairs it is also associated with increased demand for the dollar against the backdrop of statements by Fed officials for improving the Fed rate outlook.

Market Focus

  • The Bank of Japan decided by a 7-2 majority vote to hold the interest rate at -0.10%
  • Earnings Season in U.S.: Major Reports of the Week
  • U.S. commercial crude oil inventories decreased by 4.7 million barrels from the previous week
  • Australian unemployment rate stable at 5.6% in June
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