The United States of America

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

Investors focus on comments from leading US Federal Reserve officials. So yesterday, the regulator’s representative, Christopher Waller, said it was necessary to postpone the transition to the “dovish” rhetoric for at least a few more months to ensure that the recent inflation increase was temporary. Council member Lisa Cook said the officials needed more confidence that price growth was steadily slowing towards the 2.0% target before cutting borrowing costs, which could be difficult given the risks of supply disruptions due to the Middle East conflict. Vice Chairman Philip Jefferson spoke about the need to monitor a wide range of economic indicators (the state of the labor market, the dynamics of the gross domestic product (GDP), and labor productivity in the real sector) before taking action. The head of the Federal Reserve Bank (FRB) of Philadelphia, Patrick Harker, was more optimistic than others, noting that easing monetary policy will be the regulator’s next step, and the time for it is approaching but there is no need to rush too much. The most optimistic forecasts envisage the event in June but many experts are counting on the second half of the year.

Eurozone

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

Q4 Germany’s gross domestic product (GDP) fell by 0.2% YoY and by 0.2% QoQ, sending the country’s economy into a technical recession. February statistics from the Institute for Economic Research (IFO) were more positive. The German business climate index increased from 85.2 points to 85.5 points, the indicator of current economic conditions remained at 86.9 points instead of declining to 86.7 points, and the economic expectations index increased from 83.5 points to 84.1 points. The department’s president, Clemens Fuest, said that the German economy was stabilizing at a low level, and all signs indicate that GDP would decline in the first quarter. Meanwhile, the head of the German Federal Bank, Joachim Nagel, noted that inflation in the Eurozone was still high, so it was premature to move on to easing monetary policy.

The United Kingdom

GBP is strengthening against EUR, JPY, and USD.

Today, the February British consumer confidence index was published: the indicator adjusted from –19.0 points to –21.0 points, demonstrating negative dynamics for the first time in four months, although experts expected an increase to –18.0 points. National households are concerned about their personal finances and economic prospects due to high inflation. In addition, private consumption in the country has still not returned to the level before the COVID–19.

Japan

JPY is weakening against USD, EUR, and GBP.

Due to a lack of significant economic releases, currency movements are due to external factors. Investors wait for the release of January inflation data on Tuesday, with the national consumer price index expected to fall from 2.6% to 2.1% YoY and the core rate to fall from 2.3% to 1.8%, below the Bank of Japan’s target level of 2.0%. As a result, the regulator officials may postpone the transition to the “hawkish” rhetoric. However, experts note that despite the slowdown in price growth, the bank may tighten monetary policy in March if industry negotiations on wages lead to an increase of at least 4.0%.

Australia

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

According to a new survey of leading economists on the future actions of the Reserve Bank of Australia (RBA), conducted by Bloomberg, the majority of respondents believe that the regulator will cut interest rates to 4.1% in the third quarter. Previously, experts believed it would happen no earlier than the fourth quarter.

Oil

Oil prices are falling.

Pressure on the quotes is exerted by recent comments from the US Fed’s representatives and oil reserves data. Thus, yesterday, Fed’s board member Christopher Waller said the officials might refrain from lowering interest rates for at least several more months. Investors fear that maintaining a tight monetary policy for a long time could cause a slowdown in economic growth and limit oil demand in one of the leading consumers. Yesterday’s report of the Energy Information Administration of the US Department of Energy (EIA) recorded an increase in oil reserves by 3.514M barrels but the gasoline reserves decreased by 0.294M barrels and distillates reserves by 4.009M barrels.