The main news of the last week was a speech by Janet Yellen, the head of the US Fed. She said last Tuesday that economic and financial uncertainty in the world, decline in oil prices and other negative events create risks for the US economy, due to which interest rates in the USA will be raised gradually. Following this statement the USD fell rapidly. However, the decline in the USD was halted on Friday after the release strong data on the US labor market for March. It became known that the number of new jobs outside agricultural sector was 215 000 against the forecast of 205 000 and the value in February revised from 242 000 to 245 000. Average hourly wages grew by o.3% in March against the forecast of 0.2% and the previous value of -0.1%). Unemployment rate rose by 0.1%, amounting to less than 5%. Index of business activity in the US manufacturing sector, gradual acceleration of inflation and consumer confidence index for March were also positive.
Since opening of the trading day on Monday the USD is strengthening in the market due to positive US data released last Friday. The USD is growing against the commodity currencies because of the decline in oil prices.
Last Friday, in the interview with Bloomberg crone prince of Saudi Arabia Mohammed bin Salman said that his country would agree to freeze oil production only if Iran and other large oil producing countries would sign this agreement. Oil reserves in the USA rose again and world reserves of oil are close to the record high.
Future quotes of oil fell from the highs of 22 of March by 11%, world oil prices fell by over 7%.
The news scheduled for the release this week is as follows:
16:00 (GMT+2) – a speech of the head of the Bank of Canada Mr. Poloz. Central Bank of Canada adheres to soft monetary policy. The bank has announced earlier that it may introduce negative interest rates if needed. Any indications of the necessity of the negative rates in the speech by Mr. Poloz plus to the decline in oil prices will cause weakening in the CAD.
06:30 – interest rate decision by RBA. It is expected that the interest rate will be left unchanged at the level of 2.0%. Comments after the meeting will affect dynamics in the AUD and in the pair AUD/USD, which has grown by 12% since the beginning of this year. The rise in the AUD worries the management of the bank and indications of the possibility of monetary policy easing in Australia may cause the decline in the AUD.
20:00 – the release of the minutes of the US FOMC. The market has already taken into account low chances of the increase in the interest rate in the USA in April.
Any negative US macro-economic statistics will decrease expectations of the interest rate increase and will cause further decline in the USD. Strong data on the US economy and labor market will trigger the rise in the USD.
Since 15:00 market participants will focus attention on the speech by the head of ECB, Mario Draghi. In his press-conference Mr. Draghi will speak about economic situation in Eurozone and prospects of the monetary policy. Terrorist attacks in Belgium caused the decline in Euro. Events in Eurozone associated with migration situation have strengthened centrifugal forces, which also has a negative impact on Euro.
Earlier in March Mario Draghi said that Central bank would continue to reduce interest rates. This statement caused the rise in Euro.
Mario Draghi supports extra soft monetary policy of the ECB and until the next meeting of the bank on 21 April the bank will carry out verbal interventions aimed to slowdown the rise in Euro and in the pair EUR/USD.
Therefore, if this week the USD regains some of the losses it will be able to rise until the end of the month, when the meetings of the Central banks of EU, USA, Japan and New Zealand will take place.
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