5 important things this week will bring us!
What are the main events for this week? Find out from the news!
3 or 4 rate hikes in the end?
The US dollar was falling ahead of the Fed’s statement and could not strengthen even after. Let’s look why the Fed could not support the USD.
The central bank has announced an interest rate, and, as expected, it was raised by 25bp. The Fed based its decision on the strengthening economy. The line that the "economic outlook has strengthened in recent months" was added to the statement.
Key points of the Statement:
- Although inflation is still below the Fed’s target of 2%, it showed a positive dynamics. So it is expected to move up in coming months (in the last statement Mr. Powell talked about the year, not months);
- Job gains were strong and unemployment was low;
- Near-term risks to the economic outlook are roughly balanced, however, the Fed will look at the inflation development closely;
- However, despite positive assessments of the economy, the committee’s forecast for the long-run sustainable growth rate of the economy was unchanged at 1.8 percent;
- The Chairman said that the stance of the monetary policy remains accommodative;
- Trade wars were not considered in the outlook.
And what about future rate hikes?
According to economic projections, Fed officials are split on whether two or three additional interest rate increases will be needed this year. So Mr. Powell said their future policy will highly depend on the economic data. Too fast rate hikes can negatively affect the inflation.
Although rate hikes are supposed to support a domestic currency, the greenback was weak ahead and during the Fed’s statement. First of all, an unstable environment in the White House, a possibility of trade wars, and NAFTA negotiations are highly affecting the USD now. Secondly, the rate hike was so predictable, that investors did not react to it a lot. More likely, that one rate hike will not be able to support the US dollar in the long-term.
Similar
China will report the slowest surge for 28 years
On Monday, China is anticipated to inform that its economic surge speeded down to its slowest outcome for 28 years last year in the face of weakening domestic demand as well as bruising American levies that added pressure on China to come up with more…
American consumer sentiment is at a two-year minimum
In January, American consumer sentiment shrank to its lowest value since US leader was elected more than two years ago because an everlasting shutdown of the federal cabinet and financial market volatility drove worries of a steep deceleration in…
Latest news
Forex today: easing geopolitical tensions
Safe havens such as gold and Japanese yen declined as investors sentiment was boosted by eased geopolitical tensions…
Common currency ascends ahead of euro zone data
On Tuesday, the euro tacked on because market participants waited for reports on inflation and growth in the euro zone, while the Japanese yen went down after Japan’s major bank told it would be more flexible in its huge stimulus program…
Greenback edges down
On Tuesday, the evergreen buck dived because the common currency bounced off and the UK pound managed to ascend to the day’s maximums reacting to reports that British Prime Minister Theresa May is going to take control of Brexit talks…
Deposit with your local payment systems
