The United States of America

USD is strengthening against EUR, JPY, and GBP.

In February, the core index of personal consumption expenditures decreased from 0.5% to 0.3% MoM and from 2.9% to 2.8% YoY, meeting experts’ expectations. Commenting on these statistics, US Federal Reserve Chairman Jerome Powell said that they were “along the lines of what we would like to see.” It strengthened experts’ confidence that regulators will begin adjusting monetary policy in June and will cut interest rates at least three times this year. On Friday, investors expect the publication of data on the American labor market. According to preliminary estimates, the March unemployment will remain at 3.9%. However, nonfarm payrolls will fall to 204.0K and average wages to 4.1% YoY, increasing the likelihood that borrowing costs will begin to decline soon.

Eurozone

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

Today is a holiday in most countries in the region, so financial institutions are closed, and investor activity is reduced. Meanwhile, the head of the Bank of Greece, Yannis Stournaras, announced the possibility of a fourfold reduction in interest rates by 25 basis points during this year. However, there is no consensus among the European Central Bank (ECB) members on it, as some officials prefer to act cautiously, limiting themselves to fewer adjustments to borrowing costs. On Wednesday, investors expect the release of preliminary inflation data, with the consumer price index forecast to fall from 2.6% to 2.5% YoY in March and the core rate from 3.1% to 3.0%, raising the possibility of the ECB’s transition to easing monetary policy.

The United Kingdom

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

Today is also a public holiday in the UK. A 9.8% increase in the low wage to 11.44 pounds per hour, approved by Chancellor Jeremy Hunt, comes into force on Monday, affecting almost 3.0M people or 4.9% of workers across the country. Experts fear that these support measures could lead to a new rise in inflation or its long-term persistence above the target level of 2.0%, as well as a delay in the start of monetary easing by the Bank of England since officials will need to track the impact of the increase in the indicator on the economy.

Japan

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

The Q1 Tankan sentiment index of large Japanese companies for manufacturing companies decreased from 13.0 points to 11.0 points, better than the predicted 10.0 points but the activity index for service sector organizations increased from 32.0 points to 34.0 points instead expected reduction to 31.0 points. Thus, optimism in the non-manufacturing sector reached a multi-year high, offsetting the decline in industry, against which Bank of Japan officials may continue to tighten monetary policy. A survey of the management of leading national companies showed that in the new financial year (which begins in April), they plan to increase capital expenditures by 4.0%, which is less than 11.5% previously. At the same time, businesspersons expect long-term inflation to remain above the target regulator at 2.0%.

Australia

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

Tomorrow, the minutes of the last meeting of the Reserve Bank of Australia (RBA) will be published, in which market participants will look for hints on the regulator’s further actions and the possible timing of the start of monetary policy easing. In March, officials expectedly left the cost of borrowing at 4.35%, removing from the accompanying statement any mention of the possibility of further increasing it. In addition, investors will pay attention to manufacturing PMI: the indicator is expected to decline from 47.8 points to 46.8 points in March, confirming the continued pressure of high interest rates and consumer prices on the industry.

Oil

The morning rise in oil prices gave way to a decline.

Despite some uncertainty in the sector, the fundamental background remains positive. Thus, data from China strengthens investor confidence in the imminent increase in oil demand in the second world economy: in March, the manufacturing PMI increased from 49.1 points to 50.8 points, exceeding forecasts of 50.1 points, and the same indicator from Caixin – from 50.9 points to 51.1 points. At the same time, OPEC participants intend to maintain voluntary restrictions on oil production until June, which will cause a further reduction in supply volumes. Under these conditions, the positive dynamics of the asset are likely to resume soon.