Morning Market Review, forex


The euro rose rapidly against the US dollar on Wednesday, updating local highs of February 4. The reason for the emergence of a confident "bullish" dynamics was the weakening of the US currency amid the publication of the minutes of the Fed meeting. As expected, the regulator left the interest rate unchanged at 2.5%. At the same time, which turned out to be the most important, the Fed clearly stated that it is not going to make two planned rate hikes this year. In 2020, as before, the regulator expects only a one-time rate increase. The euro could not strengthen more confidently due to the uncertainty around Brexit, as there is still no consensus regarding the postponement of the UK exit from the EU.


The British pound closed Wednesday's trading with a steady decline, updating local lows of March 13. The "dovish" rhetoric of Fed Chairman Jerome Powell practically did not support the weakened pound, although it contributed to the development of a minor correction. The instrument remains pressured by the rapidly delaying Brexit process, which threatens to exacerbate the internal political situation in the UK. Theresa May still expects a postponement to the end of June, while some representatives of the EU state the need for a longer delay. Some support for the pound yesterday was provided by the statistics on consumer inflation in the UK. In February, the consumer price index rose by 0.5% MoM and 1.9% YoY after the previous data of -0.8% MoM and 1.8% YoY. However, the core index in February slowed down from 1.9% YoY to 1.8% YoY.


The Australian dollar shows strong growth against the US one, supported by the soft position of the Fed and published macroeconomic statistics from Australia. In addition, the growth of AUD is promoted by the continuing uncertainty in the Brexit process and in the US-China trade negotiations. Today, the instrument is also trading in an uptrend, however, the "bulls" are facing significant resistance. Investors are focused on the report on the Australian labor market in February. The level of unemployment suddenly decreased from 5.0% to 4.9%. The last time the unemployment rate fell below 5% was in July 2011. At the same time, the employment level in February showed an increase of only 4.6K jobs, which is significantly lower than the growth of 39.1K last month. Analysts were expecting growth of 14.0K jobs.


The US dollar fell sharply against the Japanese yen on Wednesday, retreating to local minima of February 27. The reason for the appearance of the "bearish" dynamics was the decision of the Fed to abandon the two planned rate hikes this year. Additional support for the yen was provided by the reduced investor interest in risk. In particular, the market reacted to the publication of updated forecasts from the Fitch agency. The forecast for the growth rate of the world economy in 2019 was revised from 3.1% to 2.8%. Next year, the global economy may grow by 2.8% instead of previous forecasts of 2.9%. Today the instrument is relatively stable, partly due to the closed markets in Japan on the occasion of a national holiday.


Oil prices continue to grow moderately, updating local highs of November 2018. Quotes are supported by data from the US Department of Energy, indicating a sharp reduction in oil stocks. As of March 15, reserves in US warehouses declined by a record 9.589 million barrels after declining by 3.862 million last week. Analysts predicted a slight increase by 0.309 million barrels. The "bullish" dynamics is also supported by the policy of OPEC+ and the expansion of US sanctions against Venezuela.

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