United States of America

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

In the absence of significant economic releases, the movement of quotes is determined by external factors. Note that today begins a two-day meeting of the US Federal Reserve on monetary policy, following which analysts expect the interest rate to remain at 5.50%, but will closely monitor the accompanying statements by officials and the press conference of the head of the regulator, Jerome Powell. Market participants fear that financial authorities will take a “hawkish” position, hinting that the reduction in borrowing costs will begin only in the fall, since inflationary pressure in the national economy has been increasing for several months in a row. Thus, in March, the indicator was fixed at 3.5%, moving further and further away from the target level of 2.0%, while the growth rate of gross domestic product (GDP) for the first quarter adjusted by only 1.6%, with preliminary estimates of 2.5%, practically depriving officials of arguments in favor of reducing borrowing costs in the near future. Some market participants even expect rhetoric supporting the impossibility of making changes to the current parameters this year: in this case, the American currency will be able to significantly strengthen its position against main competitors.

Eurozone

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

Investors are focused on the publication of preliminary inflation data for April and statistics on the Eurozone's gross domestic product (GDP) for the first quarter. The consumer price index (CPI) decreased from 0.8 to 0.6% MoM and remained at 2.4% YoY, while the basic indicator decreased from 1.1% to 0.7% MoM and from 2.9% to 2.7% YoY, however, being below the forecasts of 2.6%. European GDP in Q1 2024 grew more strongly than expected, amounting to 0.3% instead of 0.1% QoQ and 0.4% instead of 0.2% YoY. Data from Germany were also positive: the economy shrank by 0.2% on an annual basis, but increased by 0.2% on a quarterly basis, exceeding preliminary estimates of 0.1%, which allows one to count on its quick exit from recession. Thus, the current situation creates the necessary preconditions for the European Central Bank (ECB) to cut interest rates, and in this regard it is worth noting the comments of the head of the Dutch Central Bank, Klaas Knot, who said yesterday that the disinflation process is ongoing, which makes the June reduction in borrowing costs realistic, however, the regulator’s further steps should not be hasty.

United Kingdom

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

Today, March lending data and April statistics on the retail price index in stores from the British Retail Consortium (BRC) were published. The number of mortgage loan approvals reached an 18-month high of 61.33 thousand, with consumer lending up by 1.577 million pounds from 1.429 million pounds a month earlier, and net private borrowing up by 1.800 million pounds against preliminary estimates of 1.700 million pounds These statistics confirm the revival of the construction market and strengthen the prospects for renewed economic growth. According to BRC experts, prices in large stores rose by only 0.8%, the lowest level in almost two years, but the cost of non-food items fell by 0.6% for the first time since October 2021. These data increase the likelihood of the Bank of England switching to easing monetary policy, which most analysts expect in June or August.

Japan

JPY resumed its decline against its main competitors – EUR, GBP, and USD.

Statistics on industrial production, retail sales, and unemployment were published today. According to preliminary data, industrial production rose by 3.8% in March, driven by higher vehicle production, beating forecasts of 3.4%. Retail sales in March, on the contrary, slowed down from 4.7% to 1.2% and were below the forecast of 2.5%. The deterioration in indicators was a consequence of increased pressure from high inflation on household finances. Unemployment remained at 2.6%, with preliminary estimates of a decline to 2.5%. However, the Bank of Japan report said service prices continue to rise, but sharp wage increases offered by companies will significantly boost household incomes this year and potentially stabilize inflation around the 2.0% target.

Australia

AUD is weakening against its main competitors – GBP, EUR, JPY, and USD.

Today, March data on mortgage lending was published (as in February, the figure increased by 0.4%), while the volume of loans issued to individuals dropped from 0.5% to 0.3% with preliminary estimates at 0.4 %. Thus, the national economy remains pressured by high interest rates from the Reserve Bank of Australia (RBA).

Oil

Oil prices today have ambiguous dynamics: the morning rise gave way to a fall in quotes.

The trading instrument is pressured by the publication of February data on oil production and exports to the United States, as well as the anticipation of the results of the meeting of the American regulator on Wednesday. The US Department of Energy's Energy Information Administration (EIA) today reported that oil production in February increased from 12.58 million barrels to 13.15 million barrels per day, and exports from 4.05 million barrels to 4.66 million barrels per day. At the same time, investors fear that US Federal Reserve officials will confirm the possibility of postponing monetary policy adjustments to the fall or even hint at raising interest rates, which could seriously strengthen the dollar’s position against its main competitors. Today, the weekly inventory report from the American Petroleum Institute (API) will be published: the last time the indicator fell by 3.230 million barrels, and the continuation of this trend may support prices.