Key Releases by Solid ECN

[Solid ECN]

United States of America
USD is strengthening against its main competitors – JPY, EUR, and GBP.
Investors focus on the comments of US Federal Reserve officials and the publication of data from the US labor market. Yesterday, the head of the regulator, Jerome Powell, spoke before the US Senate Banking Committee. He said that the Ukrainian conflict could exert various negative pressures on the economy, from a significant increase in inflation to a decrease in spending and investment. What exact consequences this conflict will entail is still unknown. The official reiterated earlier statements that the agency closely monitors the situation but has not yet changed plans to raise interest rates in March. On Thursday, Cleveland Fed President Loretta Mester said the Ukraine crisis, which had already pushed up energy and food prices, only reinforced the need for monetary tightening. The February data from the American labor market, published today, were positive. Employment increased by 678K instead of the expected 400K, and the unemployment rate fell from 4.0% to 3.9%.​

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Eurozone
EUR is weakening against its main competitors – JPY, GBP, and USD.
Published today, the January data on the volume of retail sales in the Eurozone was worse than expected by experts. The indicator rose by 0.2% MoM instead of 1.5% expected and by 7.8% YoY instead of the expected 9.5%. Experts believe that a serious increase in inflation held back sales, especially fuel and food. Thus, for January, gasoline sales decreased by 1.3%. Germany's foreign trade data for January came out today. The volume of German exports of goods abroad decreased by 2.8%, but the volume of imports of goods to Germany decreased by 4.2%, which led to an increase in the trade balance to 9.4B euros. Experts note that the decline in imports is associated with a reduction in Germany's supply of raw materials and components to other Eurozone countries. Moreover, the prolongation of the conflict in Ukraine may reduce the export of German cars. German economy minister Robert Habeck has already said that mutual sanctions and rising commodity prices could slow down the recovery of the German economy.​

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United Kingdom
GBP is strengthening against EUR but weakening against USD and JPY.
Published today, February UK Construction PMI was positive. It rose from 56.3 to 59.1 points instead of the expected decline to 54.3 points. Experts attribute the sector's significant growth to the receding of the Omicron epidemic and the easing of interruptions in the supply of raw materials and components, but the shortage of qualified personnel persists. GBP remains under pressure due to the continuation of the armed conflict in Ukraine, which could lead to a significant increase in inflation and slow down the recovery of the British economy.​

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Japan
JPY weakens against USD but strengthens against EUR and GBP.
Today, January data on unemployment in Japan were published. The indicator rose from 2.7% to 2.8% due to the ongoing epidemic of the Omicron coronavirus strain in the country, which is only now beginning to recede. Rising fuel prices forced the Japanese government to take emergency measures. In particular, today, it was decided to raise the subsidy ceiling for gasoline, diesel fuel, and kerosene to 25 JPY per liter to support medium and small businesses, which will significantly reduce profits due to rising inflation.​

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Australia
AUD continues to strengthen against its main competitors – USD, euro, GBP, and JPY.
Australia's January retail sales data released today was positive. The indicator rose by 1.8% after falling by 4.4% a month earlier. The increase in consumer activity is associated with the retreat of the epidemic of the Omicron coronavirus in the country. Also, the growth of AUD is supported by an increase in commodity prices, primarily for coal, due to the armed conflict in Ukraine.​

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Oil
Oil quotes are making moderate attempts to grow.
Investors fear interruptions in the supply of Russian oil to the world market, which have become even more aggravated amid information that US President Joe Biden is under pressure to ban Russian oil exports to the United States completely. A significant increase in prices is hampered by completing negotiations on a nuclear deal between Iran and the United States, which is expected soon. In this case, the sanctions on the Iranian oil sector will be lifted, and the Islamic Republic will bring additional volumes of "black gold" to the market. Iranian Oil Minister Javad Owji has already said that the country's industry will reach maximum production levels in less than two months after the deal.​

 

[Solid ECN]

EURUSD
The European currency shows weak growth against the US dollar during the Asian session, developing a corrective momentum and testing 1.0900 for a breakout; however, further development of the "bullish" dynamics for the instrument is limited by negative market sentiment regarding the growth prospects of the eurozone economy. Analysts pay attention to the sharp increase in quotations on commodity markets after Russian President Vladimir Putin initiated a special military operation in Ukraine. Subsequently, the authorities of the Western countries imposed unprecedented sanctions on the Russian economy, and many global companies decided to refuse cooperation with business partners from Russia. In addition, the United States announced the day before that the country was completely refusing to import Russian oil, gas and other energy carriers, which is likely to further aggravate the situation on the commodity markets. Europe, in turn, will not yet be able to completely ban Russian imports, since it is much more dependent on it. However, further restrictions are possible, and, for example, the UK said earlier in the week that it intends to cut off Russian energy supplies by the end of 2022. This week, investors will focus on the decision of the European Central Bank (ECB) on interest rates. The meeting will take place on Thursday, March 10, and current market forecasts suggest that the regulator will not change the parameters of monetary policy. Moreover, it is quite possible that the ECB will not raise rates at all this year, given the possible slowdown in economic growth in the region.​

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GBPUSD
The British pound traded upwards against the US dollar during the morning session, retreating from record lows since November 2020, updated the day before. At the moment, GBP/USD is trying to consolidate above 1.3100, but there are few significant support factors for the pound on the market. Demand for high-yield assets remains subdued as investors worry about a further escalation of the conflict in Ukraine and watch the West's attempts to effectively paralyze the Russian economy with new sanctions and restrictions. The day before the United States announced a complete ban on the import of Russian energy, but noted that they do not require similar actions from their European partners. The UK, however, also announced its intention to abandon Russian imports of oil and petroleum products by the end of 2022. Investors are waiting for the publication of a block of macroeconomic statistics from the UK at the end of the week. Among other things, traders will pay attention to the January data on the dynamics of GDP and industrial production. Current forecasts suggest that the UK economy will grow by 0.2% in January after declining by 0.2% in December. Industrial Production may increase by 1.9%, accelerating from 0.4%.​

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AUDUSD
The Australian dollar shows moderate growth against the US currency in the Asian session, correcting after a strong decline at the beginning of the week. The instrument showed a steady decline on Monday and Tuesday, quickly retreating from its local highs from November 4, 2021. The reason for the appearance of negative sentiments on the market was the US statements about the possibility of a complete embargo of Russian oil, gas and other energy resources. Europe, in turn, remains dependent on supplies from Russia, although the tendency to refuse or replace resources has formed. Some pressure on the positions of the Australian currency today is exerted by weak macroeconomic statistics from Australia. Westpac Consumer Sentiment Index fell 4.2% in March after falling 1.3% in February. Analysts had expected an improvement in the dynamics of the indicator to -1.1%. Also, traders drew attention to the speech of the Governor of the Reserve Bank of Australia (RBA) Philip Lowe, who noted that the Australian economy is close to reaching inflation targets. In addition, Lowe said that the regulator at the moment will not rush to tighten monetary policy, given the deteriorating geopolitical situation in the world and a surge in activity in the commodity markets.​

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USDJPY
The US dollar shows a weak growth in pair with the Japanese yen at the trading in Asia, testing the levels of 115.80-115.90 for a breakout and updating local highs from February 15. Demand for the dollar remains strong as market participants continue to assess the prospects for global economic growth in the light of a sharp aggravation of the geopolitical situation in Eastern Europe. Western countries have imposed an unprecedented number of sanctions against the Russian Federation in response to its special military operation in Ukraine. In turn, weak macroeconomic statistics from Japan exerts pressure on the yen's positions today. Japan's GDP in Q4 2021 grew by 1.1%, slowing down from 1.3% in the previous period. Market forecasts assumed the acceleration of the Japanese economy up to 1.4%. In annual terms, GDP rates slowed down from 5.4% to 4.6%, which also turned out to be worse than experts' forecasts of acceleration to 5.6%.​

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XAUUSD
Gold prices continue to develop "bullish" dynamics, trading above the psychological level of 2000.00 and renewing the highs since August 2020 against the backdrop of a massive withdrawal of investors from risks due to aggravated geopolitical tensions. Quotes of the precious metal are actively rising against the backdrop of a deteriorating situation in Ukraine, where Russian troops continue to conduct a special military operation, which has already led to the introduction of unprecedented sanctions against the Russian economy by Western countries. Foreign companies are leaving the Russian market en masse, creating the threat of a sharp weakening of the investment flow. The key moment at the present time remains the export of energy carriers by the Russian Federation, including oil and gas. The US announced the day before that the country was refusing Russian imports, but does not expect that its European partners will be able to take similar measures in the near future. However, the EU is also concerned about the issue of energy security, and the UK, for example, announced its intention to stop importing Russian energy carriers before the end of the year. Meanwhile, oil and gas prices continue to break records in the market, threatening Western economies with a sharp increase in inflationary pressures.​

 

[Solid ECN]

EURUSD​

The European currency shows moderate growth against the US dollar during the Asian session, developing a strong "bullish" momentum formed the day before. EUR/USD is testing 1.1110 for a breakout and is located near the local highs of March 17. The reason for the appearance of optimistic moods of investors was the preliminary results of the meeting of the Russian and Ukrainian delegations, which ended the day before in Turkey. The parties announced significant breakthrough in the negotiations, which, in theory, could contribute to the de-escalation of the military conflict on the territory of Ukraine. Russian Defense Minister Sergei Shoigu also said that due to the transition of the current agreements into practice, the command decided to temporarily suspend the advance of troops in a number of areas. At the same time, it is noted that noticeable contradictions still remain between the parties, primarily on the territorial issue. The Russian authorities are expected to present their counter proposals today. In the meantime, market participants are waiting for the publication of a block of statistics on business sentiment in the euro area for March, as well as data on consumer inflation in Germany. Forecasts suggest a further increase in price pressure against the backdrop of a widespread decline in business confidence and activity. For example, the Gfk Consumer Confidence Index in Germany released the day before fell from -8.5 to -15.5 points in April, which turned out to be significantly worse than market forecasts at the level of -12 points.​

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GBPUSD​

The British pound traded up against the US currency during the morning session, trying to recover from a significant decline earlier in the week. GBP/USD is testing 1.3100 for a breakdown, receiving support after another round of negotiations between Russia and Ukraine. Traders hope that the decisions of the authorities will help to complete the special military operation on the territory of Ukraine as soon as possible and then help to ease the sanctions pressure. However, so far there is little specifics on the market: restrictions remain in place, and Russia is preparing to cut off gas supplies from April if European companies do not switch to payments under contracts in rubles. Macroeconomic statistics from the UK published the day before reflected a sharp decline in the number of Mortgage Approvals in February from the previous 73.841K to 70.993K, while analysts expected growth to 74.850K. At the same time, the total volume of Consumer Credit in February increased from 0.143 billion pounds to 1.876 billion pounds, well ahead of analysts' preliminary estimates of 0.843 billion pounds.​

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AUDUSD​

The Australian dollar is strengthening during trading in Asia, once again testing the level of 0.7520 for a breakout. AUD/USD is trading near local highs since November 2021, updated at the beginning of the week. The growth driver was the reaction of the Russian and Ukrainian delegations after the talks in Turkey the day before. Official representatives of the two countries held a face-to-face meeting in Istanbul, which was assessed as “constructive”, and now the agreements reached by this point are moving into practice. One way or another, the hope that the change in rhetoric will lead to a long-term political settlement was immediately reflected in the dynamics of risky assets, including the Australian dollar. The asset was additionally supported yesterday by optimistic macroeconomic statistics from Australia: last month Retail Sales rose by 1.8%, repeating the dynamics of January, while analysts' forecasts suggested a sharp slowdown in sales to 1.0%. Data from the US reflected the expected increase in inflationary pressures within the country. Thus, the Housing Price Index in January accelerated from 1.3% to 1.6%, while the forecast was 1.4%. The S&P/CaseShiller Home Price Index from for the same period rose from 18.6% to 19.1%, contrary to expectations of a slowdown to 18.4%.​

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USDJPY​

The US dollar shows a steady decline against the Japanese yen during the Asian session, rapidly receding from the record highs updated at the beginning of the week. At the moment, USD/JPY is developing a “bearish” momentum, formed the day before, when the market enthusiastically welcomed the preliminary results of a new round of negotiations between Russia and Ukraine. The parties announced that they had achieved some progress, which was confirmed by the reduction in military activity in the Kyiv and Chernihiv directions. However, a complete ceasefire has not been achieved, and the parties still remain at odds over territorial issues. The growth of the Japanese currency on Wednesday is not hindered by frankly weak macroeconomic statistics from Japan. Thus, the volume of Retail Sales in February decreased by 0.8%, while analysts expected the appearance of zero dynamics after a decrease of 0.9% a month earlier. In annual terms, the indicator fell by 0.8% after rising by 1.1% in January, while sales in large stores slowed from 2.6% to 0.1%, which was also worse than expected at 0.3%.​

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XAUUSD​

Gold prices show a slight increase during the morning session, recovering from the “bearish” dynamics at the beginning of the week, which led to the renewal of local lows from February 25. Pressure on the position of the instrument is exerted by positive dynamics in the US government bond market, as well as optimistic statements by participants in the negotiation process between Russia and Ukraine. Thus, the yield of ten-year US Treasuries again approached the 2.5% mark the day before, maintaining a relatively stable trend for further strengthening. As for the peace talks, according to preliminary data, the parties managed to agree on a number of issues on the neutral status of Ukraine, but territorial issues remain relevant. An additional negative factor for the instrument is the policy of global financial regulators, primarily the US Federal Reserve. Earlier, the Chair of the department, Jerome Powell, advocated a faster increase in the interest rate already during the May meeting, if the situation so requires. So far, macroeconomic data only confirms the possibility of such an outcome of events: inflation in the US is only accelerating against the backdrop of a noticeable decrease in business activity and consumer confidence.​

 

[Solid ECN]

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The United States of America​

USD is strengthening against JPY but weakening against GBP and EUR.

Yesterday, the March Non-Manufacturing PMI was released in the US: the figure rose from 56.1 to 58.3 points but fell short of the projected value of 58.4 points. This dynamic signals that the US service sector continues to grow steadily. Investors are focused on the monetary policy of the US Federal Reserve. On Tuesday, regulator officials Lael Brainard and Mary Daly made their comments. Brainard, the governor of the regulator, said that to reduce inflation, it is necessary to continue raising rates and start a sharp reduction in the balance sheet of departments immediately after the May meeting. The head of the Federal Reserve Bank of San Francisco, Mary Daly, also supported the "hawkish" rhetoric, stressing that rate hikes are necessary because high inflation is bad for the economy. Tightening monetary policy may strengthen the position of the USD, but it creates the possibility of economic slowdown and even recession, so investors are ambivalent about these actions. The market expects to receive additional data on the regulator's further intentions today from the publication of the minutes of the last meeting of the Federal Open Market Committee of the US Federal Reserve (FOMC).
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Eurozone​

EUR is moderately strengthening against its main competitors – JPY, GBP, and USD.

Today, the February data on the Eurozone producer price index was published: the figure fell from 5.1% to 1.1% MoM, but it rose from 30.6% to 31.4% YoY points. Inflationary pressure in the European economy continues to grow, which requires the ECB to take additional action to contain it. The factory orders in Germany also did not please investors: the volume decreased by 2.2% after rising by 2.3% in January, helped by a decrease in demand for German goods from abroad amid rising inflation and uncertainty caused by the Ukrainian crisis. It is worth noting today's comments of the officials of the European regulator. European Central Bank Vice President Luis de Guindos said the Eurozone's financial system is coping well with the fallout from the conflict in Ukraine and the associated economic sanctions. The head of the Bank of Italy, Fabio Panetta, was not so optimistic. He noted that the European economy might shrink this year, and the tightening of the monetary policy of the European Central Bank in the short term will lead to negative economic consequences.
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The United Kingdom​

GBP strengthens against USD and JPY but weakens against EUR.

Today, March Construction PMI was published in the UK. Instead of the expected decline to 57.8 points, the indicator remained at 59.1 points. The British construction market is recovering despite the pressure of high inflation. The National Insurance and Social Security (NHS) tax hike went into effect today. Now, most citizens and businesses are required to contribute up to 1.25%, which will put even more pressure on households already suffering from declining living standards. Business representatives asked the government to postpone tax increases, but they were never heard.
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Japan​

JPY is weakening against its main competitors – EUR, GBP, and USD.

Due to a lack of significant economic releases, JPY is traded under the influence of external factors. Investors are waiting for the opening of the country's borders for travelers from 106 countries, including the Eurozone and the US, lifting restrictions imposed in connection with the coronavirus pandemic. It should stimulate the growth of the Japanese economy, especially the tourism and service sectors. Today, the Japan Economic Research Center reported a seasonally adjusted real GDP growth of 0.3% in February. This first increase in three months was due to increased exports of local products to China.
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Australia​

AUD strengthens against EUR, GBP, and US dollar but has ambiguous dynamics against JPY.

Investors are discussing the results of the meeting of the Reserve Bank of Australia. Yesterday, the regulator left the rate unchanged at 0.10% but said that it would evaluate data on wage inflation and determine whether to start raising interest rates in the coming months. Currently, experts are counting on the first rate increase to 0.25% in June, and by the end of the year, there may be six more, and the rate, in their opinion, should be 1.75%. However, analysts also see several negative factors from a sharp tightening of monetary policy. In particular, it could seriously affect Australian borrowers, who have not seen an adjustment in value since 2010, and Australian households have record levels of mortgage debt.
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Oil​

Oil quotes have ambiguous dynamics: after the morning growth, a correction followed, and the asset lost its previously won positions.

The American Petroleum Institute (API) report on energy stocks published yesterday recorded their increase by 1.080M barrels instead of the projected decrease by 1.558M barrels, which put pressure on quotes, which then recovered. Currently, prices are falling again as the market continues to be pressured by a new wave of the coronavirus pandemic in China: 26M residents of Shanghai remain in quarantine, and the threat of a decrease in oil consumption in the Chinese economy remains. During the day, the publication of a report on oil reserves from the Energy Information Agency (EIA) is expected. A contraction of 2.056M barrels is forecast, which could provide additional support to oil prices.​

 

[Solid ECN]

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The United States of America​

USD is strengthening against JPY and has ambiguous dynamics against EUR and GBP.

Due to a lack of significant economic releases, investors focus on the monetary policy of the US Federal Reserve. The market is preparing for a sharper increase in interest rates and a significant reduction in the balance sheet, but investors fear that this will cause the US economy to slow down and even start a recession, as evidenced by the inversion of the yield curve of 10-year and 2-year bonds. However, several experts have come to the conclusion that this sign does not mean an immediate decline, and negative dynamics may begin to develop within a few years. Over the weekend, Cleveland Fed President Loretta Mester said she still believes the US Federal Reserve will be able to control inflation without causing serious damage to the economy.​

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Eurozone​

EUR is strengthening against JPY and has ambiguous dynamics against USD and GBP.

Due to a lack of significant economic releases, investors are focused on the first round of the presidential elections in France, which was won by the incumbent head of state Emmanuel Macron but it was not as confident as experts expected. The gap between him and the far-right candidate Marine Le Pen was only 4%, reinforcing fears that she could take the presidency in the second round, and France would move away from common European economic standards and even abandon the euro. At present, analysts see the likelihood of Le Pen winning the election as very small, so the second Eurozone economy is unlikely to expect additional shocks.​

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The United Kingdom​

GBP is strengthening against JPY and has ambiguous dynamics against EUR and USD.

Today in the UK, a large block of economic statistics was released. UK GDP grew by 0.1% MoM, falling short of forecasts of 0.3%, and slowed down from 9.5% to 10.5% YoY, more than experts expected, which may affect further actions of the Bank of England. The regulator may continue to tighten monetary policy but will do it more carefully. The volume of industrial production in the country also did not please investors: the indicator decreased by 0.6% MoM instead of the projected growth of 0.3% and decreased more than experts expected – from 3.0% to 1.6% YoY.​

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Japan​

JPY is weakening against its main competitors – EUR, USD, and GBP.

Today, Bank of Japan officials lowered their estimates for most of the country's regional economies (the changes affected eight major regions) amid rising commodity prices and a possible correction in overall forecasts. Bank of Japan member Shinichi Uchida said the regulator would be supported by an ultra-loose monetary policy as the current rise in inflation was fueled by fuel spending and could hurt the country's fragile economic recovery. At the same time, the head of the department, Haruhiko Kuroda, warned of very high uncertainty amid the Ukrainian crisis.​

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Australia​

AUD is moderately weakening against its main competitors – JPY, USD, EUR, and GBP.

Due to a lack of significant economic releases, investors focus on politics: on May 21, parliamentary elections will be held in Australia. The election campaign began today, and it cannot yet be stated that it has been successful for the current Prime Minister, Scott Morrison. According to polls, the Liberal Party, which he heads, could lose up to ten seats in parliament, but it is too early to talk about Morrison's resignation.​

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Oil​

Oil quotes are correcting down today.

The coronavirus pandemic in China still exerted pressure on prices, which led to the blocking of a major financial and industrial center – Shanghai. Currently, China is the largest energy importer in the world, and the Shanghai area consumes 4% of all the “black gold” purchased by the country; and further tightening of lockdown measures could lead to a decrease in consumption. Investors are looking forward to bringing to market the 60M barrels promised by the International Energy Agency from government stockpiles of key consumers. Last week, the US oil rig count increased from 533 to 546 units, putting pressure on quotes.​

 

[Solid ECN]

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United States of America

The USD is moderately strengthening against its main competitors – the euro, the pound and the yen.

Today is a public holiday in the USA – Good Friday, so financial institutions are closed, and the activity of bidders is reduced. Investors are preparing for further strengthening of the US currency due to a serious tightening of monetary policy by the US Fed. The correction of rates from 0.50% and above is practically beyond doubt, since these plans were confirmed by all the leading officials of the department. At the same time, most of them are confident that the national economy will withstand the load and will not go into recession. Earlier, the weekly data were published, reflecting the high pace of recovery of national labor. Thus, the number of initial applications for unemployment benefits, although it turned out to be higher than forecasts (185K against 171K), but the total number of citizens receiving payments from the state is steadily decreasing and this time amounted to 1.475M people. It should also be noted that President Joe Biden proposed the candidacy of former Treasury Department official Michael Barr for the post of deputy chairman for banking supervision of the US Fed. In his new position, he will take part in the development of the Dodd-Frank Law restricting the activities of the banking system. If approved by the National Congress, Barr will be tasked with overseeing the country's largest financial institutions, including JPMorgan Chase & Co., Bank of America and Citigroup Inc., as well as monitoring the functioning of security measures for creditors and their compliance with capital requirements.​

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Eurozone

The euro is moderately weakening against the USD, strengthening against the yen and has ambiguous dynamics paired with the pound.

Today is a public pre-Easter holiday in the EU countries, so financial institutions are closed, and the activity of bidders is reduced. Investors continue to evaluate the results of yesterday's meeting of the European Central Bank (ECB). As expected, the regulator left the rates at the same levels: key at around 0.00%, deposit at -0.50%, margin at 0.25%. Officials did not correct the parameters of the current monetary policy, adhering to the previous plan to wind down the APP program in Q3 2022. Only after some time after that, the increase in rates may begin. ECB President Christine Lagarde told reporters that officials are closely monitoring the situation in the economy and predict the possibility of accelerating inflation, especially in the near future. It is possible that consumer price growth will peak by the middle of the year, after which it will begin to decline against the background of a reduction in consumer demand.​

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United Kingdom

The pound is strengthening against the yen, but is weakening against the USD and has ambiguous dynamics paired with the euro.

In general, the British economy is showing signs of slowing down: in February, the country's GDP increased by only 0.1% instead of the expected 0.3%, and this is still without taking into account the losses caused by the Ukrainian crisis. Inflation also continues to rise and reached 7.0% in March, despite a three-fold increase in the Bank of England interest rate (to 0.75%). Currently, investors are again concerned about the choice of the agency's course of action: officials may continue to raise rates or take a wait-and-see attitude, while maintaining incentives to support the economy in conditions of uncertainty. Recently, the head of the regulator, Andrew Bailey, hinted at the possibility of the second option, but it is still unknown whether the other officials of the regulator will support him.​

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Japan

The yen is weakening against its main competitors – the euro, the USD and the pound.

In the absence of significant economic releases, the Japanese currency is traded under the influence of external factors. It is only worth noting that, according to Reuters sources, the Bank of Japan at the upcoming monetary policy meeting this month may raise its inflation forecast for the current fiscal year to almost the target level of 2%. The indicator will change against the backdrop of rising prices for commodities, fuel and food. At the same time, officials will continue to maintain the current ultra-loose monetary policy to support the recovery of the national economy from the coronavirus pandemic. It is still early to tighten the current parameters – the growth of wages does not correspond to the rapid pace of inflation.​

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Australia

The Australian currency is weakening against the USD and the pound, strengthening against the yen and has ambiguous dynamics paired with the euro.

Quotes are under pressure from weak March data on the Australian labor market: the unemployment rate remained the same at 4.0%, although analysts predicted a value of 3.9%, and employment increased by only 17.9K instead of the expected 40.0K. Nevertheless, the unemployment rate in the country still remains at a low enough level, which gives the Reserve Bank of Australia the opportunity to start a serious tightening of monetary policy after the next elections to the national parliament.​

 

[Solid ECN]

Key Releases​

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The American currency is strengthening today against the yen and the pound, but weakening against the euro.​

Today fresh data on the US labor market was published, which turned out to be ambiguous. The number of initial jobless claims increased by 184K, exceeding the forecast of 180K, but the total number of citizens receiving unemployment benefits continued to decline and decreased from 1.475M to 1.417M. In general, the US labor market is recovering. Also note the comments of the head of the Federal Reserve Bank of San Francisco, Mary Daley. Like most regulator officials, she advocated an early rate hike to a neutral level, but admitted that such actions by the US Fed could cause a moderate recession, although she does not believe in the implementation of such a scenario. Earlier in the week, Atlanta Fed President Rafael Bostic also voiced his concerns. In general, the US economy looks confident due to the recovery of the labor market and the construction sector, but a serious difference of opinion within the US Fed increases the uncertainty in its further actions.
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The European currency is strengthening today against its main competitors – the USD, the pound and the yen.​

In the focus of investors' attention is the publication of March data on the consumer price index in the eurozone countries. On a monthly basis, the indicator increased from 0.9% to 2.4%, and on an annual basis - from 5.9% to 7.4%. It should be noted that the growth of both indicators fell short of the forecasts (2.5% and 7.5%, respectively), which gives experts the opportunity to assume that inflation in the eurozone reached its peak in March. However, price increases remain at record highs, requiring the intervention of the European Central Bank. Recall that earlier officials of the regulator announced the termination of the securities buyback program in Q3 2022, but the rate increase may follow only some time after that. However, the mood of European officials may change. For example, ECB vice-president Luis de Guindos said on Thursday that the bank could end its asset purchase program as early as July and immediately raise rates, but stressed the need to remain cautious and flexible in conducting monetary policy due to serious uncertainty caused by the Ukrainian crisis.
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The British currency is weakening today against the USD and the euro, but is strengthening against the Japanese yen.​

Investors are looking forward to today's speech by the head of the Bank of England, Andrew Bailey, in which they will look for hints on further actions of the British regulator. Officials are expected to continue raising rates as inflation hit a 30-year high of 7% in March, but it's hard to say how big the hike will be. Experts believe that it can be from 25 to 50 basis points.
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The Japanese currency is weakening today against its main competitors – the euro, the pound and the USD.​

The Japanese government released its monthly economic data today, raising its assessment of the state of the Japanese economy for the first time in four months. The document states that it is being restored due to the retreat of the coronavirus pandemic. Growth is also supported by an increase in private consumption and demand for services, but the increase in the cost of energy and food products slows down the growth of consumer sentiment. The report also indicated that the recent collapse of the yen has increased pressure on consumers and companies focused on the domestic market. The government sees financial market volatility, rising commodity prices and supply disruptions as the biggest risks to economic recovery.
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The Australian currency is weakening today against the USD, the pound and the euro and has ambiguous dynamics paired with the yen.​

In the absence of significant economic releases, the Australian dollar is traded under the influence of external factors. Investors are waiting for the release on Friday of preliminary March data on business activity in the Australian economy. Industrial activity is expected to decline from 57.7 to 57.0 and services from 55.6 to 55.0, but overall should remain at high levels, confirming the Australian economy is ready to pick up Reserve Bank of Australia interest rates.
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Oil quotes are making moderate attempts to grow today.​

The EIA report published recorded a serious decline in oil and petroleum products inventories in the USA. Stocks of "black gold" immediately decreased by 8.020M barrels, distillates – by 2.664M barrels, and gasoline – by 0.761M barrels. The consumption of petroleum products in the USA continues to grow, increasing the volume of demand in the oil market. Also, the rise in prices is supported by the statement of the Libyan authorities that the volume of production in the country decreased by 550K barrels due to the idle time of large deposits and export terminals.​

 

[SOLIDECN]

Key releases​

The United States of America

The US currency is declining in pairs with its main competitors – the pound, the euro and the Japanese yen.

The USD is correcting ahead of tomorrow's meeting of the US Fed, which will discuss the issue of adjusting the interest rate and reducing the regulator's balance sheet. An increase in the rate by 50 basis points expected by analysts can provide unconditional short-term support for the US currency, which at the moment may exceed 104.0 points in the USD Index. As for macroeconomic statistics, the index of business activity in the manufacturing sector of the USA, unexpectedly for experts, fell and amounted to 55.4 points against 57.1 points a month earlier, demonstrating the negative impact of record inflation, which affects the activities of enterprises within the country.​

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Eurozone

The European currency has ambiguous dynamics paired with the yen and the USD, but is declining against the pound.

The focus of bidders is today's publication of a block of macroeconomic data on the state of the labor market in Germany. According to the report, the number of unemployed fell by 13,000 in April, which, however, is worse than analysts' forecast of -15,000 and much lower than the 18,000 figure recorded in March. Thus, the overall unemployment rate in the country without seasonal fluctuations amounted to 2.309M people, having decreased from 2.362M a month earlier. The unemployment rate remained unchanged at 5.0%, and this may indicate a serious slowdown in economic development, which may be reflected in macroeconomic statistics at the end of the current quarter.​

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The United Kingdom

The pound is strengthening against its main competitors – the euro, the yen and the USD.

Data on the index of business activity in the manufacturing sector had a positive impact on the quotes of the British currency: the April figure rose to 55.8 points, ahead of both analysts' forecasts of 55.3 points and the last month's figure of 55.2 points. Thus, the UK, at the moment, is the only major country whose business activity indicators show growth in April, while a stable negative trend is observed in the EU, the USA and other countries.​

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Japan

The yen is weakening against the euro and the pound.

The Japanese currency is actively losing value against the background of the strengthening of the US currency. Earlier, the Bank of Japan said that consumer inflation will continue to accelerate this year, as food prices, utility rates and commodity prices continue to rise. According to the regulator's forecasts, a slowdown in the negative dynamics will become possible only by 2023, and until that moment, the country's financial authorities do not plan to intervene in the process and tighten monetary policy, since inflation in Japan is much lower than in other developed countries, although preliminary data for April indicate its increase to 1.8% from 0.8%.​

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Australia

The Australian dollar is strengthening against all major competitors – the euro, the pound and the USD.

The currency received an impulse to growth after the decision of the country's financial authorities to raise the interest rate by 25 basis points at once from 0.10% to 0.35%, which came as a surprise to analysts who expected the rate to be adjusted to 0.25%. According to the head of the regulator, Philip Lowe, now is the most opportune moment to start a cycle of normalization of monetary conditions. Meanwhile, the unemployment rate in Australia has fallen to 4.0%, and the bank's forecast suggests that the rate will fall to 3.5% by early 2023, the lowest level in the last 50 years. In addition, the regulator predicts the strengthening of the national economy by 4.25% by the end of 2022 and by 2.0% during 2023, when the inflation rate will normalize due to the current increase in the interest rate.​

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Oil

Oil quotes after yesterday's growth began today's trading session with a decline.

Investors are waiting for the publication of the sixth package of sanctions against the Russian economy, which, among other things, will contain steps to cancel the supply of energy resources. Representatives of the eurozone countries intend to completely get rid of oil dependence before the end of the year, and until that time they will introduce gradual restrictions on imports. In addition, the asset is under pressure from the worsening epidemiological situation in China, which has already caused production to fall to its lowest level since February 2020 (April Purchasing Managers Index (PMI) was fixed at 47.4 points). The key event of the week that the oil raiders are looking forward to is the OPEC+ meeting, scheduled for May 5th.​

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[SOLIDECN]

Euro sharpens decline to two-week low amid grim outlook

Euro fell in European trade against dollar for third straight session, hitting two-week lows amid grim outlook for European services and manufacturing, which could hinder the ECB's policy tightening plans. The dollar extended its gains following recent remarks by Fed officials, which confirms the ECB will carry on its battle against inflation in the US. EURUSD fell 0.7% fell 1.0252, the lowest since November 11, after losing 0.4% on Friday, the second loss in a row as two-year German treasury yields slowed down.

Euro fell 0.3% last week against dollar on profit-taking away from four-month highs at 1.0481.

Grim Outlook

Europe's manufacturing PMI data are expected later today to show a slowdown in activities in November.
The data is expected to bring down bets on the European Central Bank's expected rate hikes at upcoming meetings.


The Dollar

The dollar index rose 0.6% on Monday on track for the third profit in a row, hitting two-week highs at 107.59 against a basket of major rivals.
Recent US data showed retail sales rose past estimates in October, while Fed officials such as San Francisco Fed President Mary Dale said it's reasonable the Fed will raise rates to 5.25% by early next year.​

 

[SOLIDECN]

Dollar on track for weekly losses on Fed rates

Dollar fell in European trade on Friday against a basket of major rivals, extending the gains for the fourth day in a row, and almost hitting three-month lows, and on track for the second weekly loss in three weeks following weak US data and the release of Fed's minutes. Such Fed minutes clearly bolstered the case for a 0.5% rate hike in December and a slower pace of policy tightening.

The Index

The dollar index fell 0.25% to 105.68, with a session-high at 106.16, after closing down 0.2% yesterday, the third loss in a row, edging near three-month lows at 105.34. Dollar is now down 1.2% so far this week on track for the second weekly loss in three weeks.

Weak Data

Recent US data showed manufacturing and services activities tumbled heavily in November, hinting at potential economic recession in the fourth quarter of the year.


The Fed

Fed's minutes released for the November 1-2 meeting showed most policymakers agreed it's important to slow down the pace of policy tightening.


Fed Minutes

Chances for a 0.5% rate hike in December by the Fed rose from 75% to 85% after Fed's minutes, while chances for a 0.75% rate hike fell from 25% to 15%.​

 

[voneberbach]

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