Andrey Maslov, analyst, FINAM Group
On Thursday, March 18, the EUR / USD pair dropped 0.28% amid a message from the Fed that the regulator will not raise interest rates until the end of 2023, despite the rapid recovery of the world’s largest economy. The DXY dollar index is growing by 0.19% and is at 91.623.
Undoubtedly, the most important event of yesterday was the Fed meeting on the interest rate and the subsequent comments after it. Thus, the regulator updated its forecast and said that in 2021 the economy will grow by 6.5%, which will be the largest annual GDP jump since 1984, and the difference compared to the previous forecast three months ago will be 2.3 p.p. Forecast for inflation for 2021 was 2.4%, which was above the Fed’s target of 2%, but by 2022 inflation will slow down to the target of 2.0%. At the same time, 7 out of 18 Fed officials now expect interest rates to rise by 2023. The updated forecast also includes a decrease in the unemployment rate from 4.5% in 2021 to 3.5% by 2023.
Fed Chairman Jerome Powell himself said that the Fed will continue to buy bonds at the same pace as it helps to provide favorable financial conditions for the market, thereby supporting the flow of loans to households and businesses.
The epidemiological situation in Europe still leaves much to be desired. Against the background of the refusal of a number of countries to use the AstraZeneca vaccine due to news of thrombosis in those vaccinated, the World Health Organization still continued to recommend this vaccine to fight the pandemic. Recall that in many EU countries, new restrictions and lockdowns have been introduced since the beginning of this week.
As for macroeconomic statistics, the US data pool for the construction sector for February was released yesterday. Thus, the number of issued building permits fell by 10.8% (MoM) compared to the January growth of 10.7% (MoM). The volume of new home construction in February decreased by 10.3% (mom) against a decline of 5.1% (mom) a month earlier.
In the eurozone, the final data on inflation was published, which amounted to 0.9% (y / y) in February, which is fully consistent with both the preliminary estimate and the result of the previous period. The core inflation rate was 1.1% (yoy), which is also in line with the preliminary data and is lower than the January result of 1.4% (yoy).
Today in the US will be published weekly data on the number of initial claims for unemployment benefits, as well as the index of business activity in the manufacturing sector from the Federal Reserve Bank of Philadelphia for March.
In the eurozone, the number of new car registrations for February, as well as the trade balance for January, will become known.
In addition, an important event today will be the decision of the Bank of England on the interest rate. Many analysts do not expect changes in the monetary policy of the British regulator.
The EUR / USD rate in the morning approached the resistance line at 1.2000, but later corrected and is trading at the level of 1.1944. Stochastic lines continued their irregular upward movement, but are still greatly slowed down. Thus, the situation is still favorable for buying in the short term.
This information is not investment advice.