Summary:
- US dollar gathers pace ahead of the Federal Reserve meeting
- European stock markets hold onto their modest gains
- Oil prices keep rising as investors await the weekly update on stocks from API
The US dollar did not look bad in the morning, however, since then it’s recovered quite substantially pushing the EURUSD back below a 1.23 handle. As for now the US currency is rising (Bloomberg index) 0.55% being by far the best performer within the G10 basket. The better performance could stem from the fact that some market participants expect the Federal Reserve to lift its projected amount of rate hikes for this year from three to four nonetheless we advise to be cautious in betting on such a scenario. If so, the US dollar as well as the equity markets could witness just a short-lived change in their underlying trend.
Unexpectedly UK inflation slowed in February more than estimated suggesting that a May rate hike is far away to be named ’a done deal’. Nonetheless, despite a miss a pivotal technical level stayed intact suggesting bears are not going to give back control on the market. Consequently, the GBP managed to sustain its yesterday’s gains to some extent remaining well above a 1.40 handle.
US President Donald Trump is always among the most influential people in the world regardless of what the field of the global economy we are talking about. He has sparked recently some concerns regarding a possible trade war imposing tariffs on imported steel and aluminium igniting retaliatory steps taken by the European Commission. Now Trump is going to take on virtual currencies via signing an executive order banning America citizens from using Venezuelan cryptocurrency dubbed “petro”.
Widespread declines seen on Wall Street yesterday fuelled a broader sell-off in Asian and made losses in Europe harder to catch up. After a few hours of trading major European benchmarks are subtly increasing having still a lot to do in order to trim all losses incurred on Monday.
Looking forward the API is going to release its weekly update on a change in oil stocks. Meanwhile, both grades (WTI and Brent) of oil are adding a decent 1.5% each in anticipation of the data.