Ekonomické zprávy

Asian session review: the US dollar is showing negative dynamics

TimeCountryEventPeriodPrevious valueForecastActual
00:30AustraliaGross Domestic Product (QoQ)Quarter IV0.3%0.3%0.2%
00:30AustraliaGross Domestic Product (YoY)Quarter IV2.1%1.4%1.5%
07:00GermanyTrade Balance (s.a.), blnJanuary23.321.527.5

During today's Asian trading, the US dollar declined slightly against major currencies as market participants adjusted their positions ahead of Fed Chairman Powell's speech.

The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) fell by 0.14% to 103.66. Today at 15:00 GMT, the head of the Fed will speak, and investors expect that he will confirm that the Fed will wait for additional data before making any decisions on monetary policy easing. Powell can also repeat that high core inflation in January did not significantly change the central bank's forecast. However, if Powell signals more forceful pushbacks, that could lead to further hawkish re-pricing. According to the CME FedWatch Tool, markets see a 21.6% probability of a 25 basis point rate cut at the Fed meeting in May, and a 70.9% probability of a rate cut in June. In addition to Powell's speech, the important event of this week will be the publication of the February nonfarm payrolls report (on Friday). The pace of hiring remains strong, and experts expect that employment increased by 200,000 in February. In addition, the unemployment rate is expected to remain unchanged, and the growth of average hourly earnings slowed to 0.3% m/m amid normalization of supply and demand for workers.

The euro rose 0.1% against the US dollar as investors prepare for tomorrow's ECB meeting. Most likely, ECB policymakers will continue to exercise some caution in assessing monetary policy. Therefore, there are strong doubts that ECB policymakers will decide to cut rates at the moment. According to economists, the timing of the initial rate cut will be postponed to the middle of this year. While the eurozone economy is on the verge of recession, inflation, which is still above the ECB's target, and wage growth, which is probably still too high to achieve this goal, should keep the ECB on standby this week and over the next few months. The ECB is expected to implement an initial rate cut of 25 bps in June and report a still cautious approach to policy easing. Against this background, it is predicted that rates will decrease by 25 bps at every meeting after June, but there may be a cautious tone in official statements and communications from ECB President Lagarde and other ECB members.

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