Ekonomické zprávy

Asian session review: the US dollar is showing positive dynamics

TimeCountryEventPeriodPrevious valueForecastActual
03:00JapanBoJ Interest Rate Decision -0.10%0%0%
04:30AustraliaAnnouncement of the RBA decision on the discount rate 4.35%4.35%4.35%
07:00SwitzerlandTrade BalanceFebruary2.72.22.2

During today's Asian trading, the US dollar rose markedly against major currencies, while investors are preparing for the Fed meeting, hoping to get additional clues about when the Central Bank may move to ease monetary policy.

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) rose by 0.38% to 103.83 (the highest value since March 6). The results of the Fed's March meeting will be announced tomorrow at 18:00 GMT, and although economists do not expect the Fed to make changes to policy parameters, the focus will be on the Fed's interest rate forecasts. In December, Fed policymakers predicted that by the end of 2024, the rate would be cut by 0.75% or three times by 0.25%. According to experts, the risks are skewed to the Fed's median 'dot plot' forecast showing less easing than in December which would likely be dollar positive. According to the CME FedWatch Tool, markets see a 8.7% probability of a 25 basis point rate cut at the Fed meeting in May, and a 55.2% probability of a rate cut in June (compared to 69.3% a week earlier), with 72 basis points of cuts priced in for this year.

The yen fell 0.7% against the US dollar after the Bank of Japan, as expected, raised the interest rate to 0% from -0.1%. The central bank has announced that it is ending its policy of negative interest rates and controlling the bond yield curve (YCC), as well as stopping purchases of risky assets, including exchange-traded funds (ETFs). Experts warned that the yen will continue to decline as it remains a funding currency and is likely to keep being utilized for carry trades. In addition, interest rate differences between Japan and the US remain stark.

The Australian dollar fell by 0.65% against the US dollar after the Reserve Bank of Australia (RBA) left rates unchanged, but tempered its tightening bias. RBA said the cash rate target will remain at 4.35% and the interest rate paid on exchange settlement balances will stay at 4.25%. "The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out," said the RBA. That compared with the previous phrasing that "a further increase in interest rates cannot be ruled out".

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