The United States of America

USD is strengthening against EUR, GBP, and JPY.

Investors are focused on the results of the two-day meeting of the US Federal Reserve. According to forecasts, interest rates will remain at 5.50%, but there will be hints of further actions in the monetary policy. Most experts expect officials to stick to their previous positions and announce that significant progress in the fight against inflation has been made but also confirm their intention to wait for further evidence of a sustained slowdown in consumer price growth before starting to reduce borrowing costs. Now traders expect that the transition to “dovish” rhetoric will take place in June but it is possible, as the February inflation growth was 3.2% instead of the expected 3.1%, department representatives will postpone the start of active actions to the second half of the year, in which case the American dollar will strengthen against its competitors significantly. Board members will also publish a “dot plot” in which they predict the number of reductions in borrowing costs this year: previously, a three-fold adjustment was expected. Any meeting result may cause significant movement in the foreign exchange market.

Eurozone

EUR is strengthening against JPY and GBP but weakening against USD.

The German producer price index fell from 0.2% to –0.4% in February, exceeding analysts’ expectations of –0.1%, and strengthened from –4.4% to –4.1% YoY, falling short forecasts at –3.8%. The indicator continues its negative trend, increasing the likelihood of a further slowdown in consumer inflation. Today, the head of the European Central Bank (ECB), Christine Lagarde, tried to warn investors against excessive enthusiasm, saying that the regulator cannot make specific commitments and predetermine the number of interest rate cuts this year, even if it begins easing monetary policy in June. The pace of reduction in borrowing costs will depend on incoming economic data. The official also said that the current slowdown in price pressures is likely to be longer-lasting and less dependent on commodity prices.

The United Kingdom

GBP is strengthening against JPY but weakening against USD and EUR.

The February consumer price index fell more than expected, with the national labor market showing clear signs of cooling, against which Bank of England officials may move to cut interest rates earlier. Thus, the indicator adjusted from 4.0% to 3.4% instead of 3.5% YoY, and the core value from 5.1% to 4.5% compared to forecasts of 4.6%. Most experts expect monetary easing to begin in June. However, the current economic conditions make it more likely that parameters will be adjusted as early as May, earlier than members of the US Federal Reserve and the European Central Bank (ECB).

Japan

JPY is weakening against EUR, GBP, and USD.

Today is a public holiday in Japan, so financial institutions are closed, and investor activity is reduced. Despite the Bank of Japan raising interest rates to 0.10%, the local currency is under pressure as the country’s borrowing costs remain the lowest compared to other developed economies. In this situation, former Deputy Finance Minister Eisuke Sakakibara said that the authorities may resort to intervention if the yen exchange rate reaches 155.00–160.00. Previously, investors believed that the threshold for active government action would be 150.00, but these expectations did not materialize. Tomorrow, market participants will pay attention to foreign trade data: according to preliminary estimates, in February, exports increased by 5.3%, imports by 2.2%, and the trade balance deficit decreased to 810.2B yen, supporting the yen.

Australia

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

Due to a lack of significant economic releases, currency movements are due to external factors. On Thursday, investors expect the publication of statistics from the labor market: according to preliminary estimates, the employment rate will increase by 39.7K, and unemployment will decrease from 4.1% to 4.0%. If the forecasts are realized, the sector will demonstrate its strength, allowing the Reserve Bank of Australia (RBA) to keep interest rates high for a long time.

Oil

Oil prices are adjusted downwards.

The negative dynamics are developing as investors await the results of the US Fed monetary policy meeting: they fear that regulator officials may hint at postponing the start of interest rate cuts from June to the second half of the year. However, the fundamental background remains positive. The American Petroleum Institute (API) reserves report published yesterday recorded a decrease of 1.519M barrels instead of the expected increase of 0.077M barrels, and today, according to forecasts, statistics from the Energy Information Administration of the Ministry The US Energy Industry (EIA) will reflect a correction in oil reserves by –0.900M barrels, and gasoline reserves – by –1.350M barrels, supporting oil quotes.