The United States of America

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

In February, building permits increased by 2.4% to 1.524M: the real estate market remains strong, supporting the economic recovery. On Friday, investors expect the publication of the core price index of private consumption expenditures, which US Fed officials consider in the monetary policy decisions. According to preliminary estimates, the indicator will remain at 2.8% YoY and decrease from 0.4% to 0.3% MoM, confirming the inflation slowing. However, if the value exceeds forecasts, representatives of the regulator may reschedule the transition to a “dovish” course for the second half of the year. Yesterday, the head of the Federal Reserve Bank (FRB) of Atlanta, Raphael Bostic, said that he expects only one increase in interest rates of 25 basis points this year rather than two as the economy continues to see steady growth in consumer prices and macroeconomic indicators exceed estimates.

Eurozone

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

Investors are focusing on comments from leading European Central Bank (ECB) officials. Today, the regulator’s chief economist, Philip Lane, said wage growth was slowing, allowing regulator officials to move toward a “dovish” policy. The Bank of Italy Governor Fabio Panetta expressed hope that the ECB is getting closer to easing monetary policy as inflation approaches 2.0%. Currently, most experts expect interest rate adjustments to begin in June or July, with total cuts expected to reach 90.0 basis points by the end of the year.

The United Kingdom

GBP is strengthening against EUR, JPY, and USD.

In March, the Confederation of British Industry (CBI) index of changes in retail sales increased from –7.0 points to 2.0 points instead of forecasts of –13.0 points, moving into positive dynamics after ten months of contraction. However, the mood of leading retailers remains pessimistic. In April, they expect the value to adjust to –25.0 points, already beginning to reduce the volume of product orders from manufacturers. Most likely, a significant improvement in the situation is possible only with a further slowdown in inflation rates or the beginning of a monetary easing cycle by the Bank of England.

Japan

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

According to the Bank of Japan’s meeting minutes published today, regulator members agreed that the likelihood of inflation reaching the bank’s target level of 2.0% is increasing. If the favorable cycle of rising wages and consumer prices is confirmed, regulator officials may consider further steps to tighten monetary policy. Chief currency diplomat Masato Kanda said that yen weakness is not supported by fundamental factors but is a consequence of speculation in the market, and recalled possible government intervention to stabilize the national currency. Similar warnings have been repeatedly expressed previously, but these measures have still not been taken.

Australia

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

Due to a lack of significant economic releases, currency movements are due to external factors. The government will support an increase in the low wage this year less than last year: several experts fear such a decision will accelerate the inflation rate. On the other hand, the figure increased by 5.75% a year ago, but the consumer price index has dropped from a peak of 8.4% to 3.4%. However, inflation risks in the national economy remain, preventing officials of the Reserve Bank of Australia (RBA) from moving to adjust interest rates.

Oil

Oil prices resumed growth.

The positive dynamics are supported by two main factors: mutual attacks on energy facilities in Russia and Ukraine, as well as unsuccessful negotiations between Israel and the Palestinian Hamas movement: American mediators failed to reach an agreement on a temporary ceasefire in the Gaza Strip. An additional long-term factor is investor confidence in the imminent start of easing monetary policy by officials of the US Federal Reserve, the European Central Bank (ECB), and the Bank of England in June, which will support the global economy and ensure an increase in oil demand.