FINAM FOREX: US Dollar Holds Near Lows Awaiting Fed Minutes


19 May 2021

Anna Zaitseva, analyst, FINAM Group

On Wednesday, May 19, the US dollar remains close to its multi-month lows below 90.0 in anticipation of the publication of the Fed Minutes.

As of 11:42 am Moscow time, the EUR / USD rate is decreasing by 0.12% and is at the level of 1.22122, while the DXY dollar index is growing by 0.18% and is trading at 89.892. As a result of yesterday’s session, the rate of the main currency pair increased by 0.6%, to the level of 1.22227, and the DXY indicator decreased by 0.5%, to 89.734.

Market participants are waiting for the publication of the minutes of the last meeting of the Federal Open Market Committee of the Fed, which should confirm the regulator’s estimates that the US economy still needs additional monetary stimulus. Despite the sharp acceleration in inflation, the Fed continues to argue that this is only a temporary phenomenon and expects inflation to return to the 2% target next year. At the same time, the labor market has not yet recovered from the pandemic. At the same time, the Fed does not plan to raise the interest rate earlier than 2023, while investors estimate the likelihood of a rate hike by the end of 2022 at 80%.

In terms of makrostatistiki, yesterday the data on GDP were released in the eurozone. Results of the second revaluation for Iquarter did not change compared to the first estimate and remained at the level of -0.6% (q / q) versus -0.7% (q / q) in the previous period.

Also in the eurozone, preliminary results on the change in employment became known. At the end of the first quarter, the indicator decreased by 0.3% (q / q) against an increase of 0.4% (q / q) in IV quarter of last year.

In the US, the latest data on the housing market was released yesterday. Thus, the number of building permits issued in April increased to 1.76 million compared to 1.755 million a month earlier, which, however, was below the consensus forecast of 1.77 million.

At the same time, the volume of new home construction fell in April by 9.5% (m / m) to 1.569 million, while analysts had expected a result of 1.71 million.

Today it is necessary to follow the publication of the final April inflation data in the eurozone, and the speech of the head of the Federal Reserve Bank of Atlanta Rafael Bostic is expected in the USA.

The EUR / USD rate continues to rise, being in the middle of the range 1.2150-1.2300. Stochastic lines are in the overbought zone, which indicates limited upside potential and the likelihood of correction / consolidation for the instrument in the short term.

This information is not investment advice.

Libertex [CPS] WW

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