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Dollar accepted outcomes of FOMC

Dollar accepted outcomes of FOMC
The first reaction of the market to outcomes of FOMC session was emotional and contradictory. Still, then all calmed down and gradual sale of dollar started. The main negative factor for American currency was decreased forecasts on economic growth for this year. Janet Yellen expressed concerns about the fact that improvement of labor market isn’t accompanied by confident growth of wages. Herewith it was highlighted that further decrease of unemployment would be unstable. Speaking of positive for dollar, we should note that absolute majority of FOMC members expects start of monetary policy tightening still in this year. According to outcomes of FOMC session, the pressure on dollar will be retained in the short term. Herewith local data continue to influence corresponding currencies actively. Previous day was very fortunate for British pound. The report on labor detected considerable growth of wages in the U.K., what gives a hope for growth of consumers’ activity and thus for increase of inflation expectations. Still, an attempt of New Zealand dollar to grow after FOMC session failed. Last night weak data on GDP for the 1st quarter were published, they sent the pair to minimums again.

What concerns today’s events, we’d like to highlight several, from our point of view, most important ones:

1)    SNB session on monetary policy. This regulator rarely takes decisive steps, but if it does, then it shakes the market violently. SNB is obviously unsatisfied with current rate of Swiss franc, but it has only few effective measures at its disposal. One of probable measures is further increase of negative interest rates on deposits.

2)    Greece. Today another meeting of EU finance ministers will be held. Parties have already expressed doubts that this meeting will lead to compromise. Still, there is time for negotiations till the end of the month, so today’s failure isn’t to become fatal.

3)    US consumer inflation. As usual, it depends on the fact. Weak data will become an additional reason for pressure on dollar.

4)    Retail sales in the U.K. Yesterday pound enjoyed the data on labor market in full, but confirmation in the form of buyers’ activity is necessary to strengthen this movement. Still, this indicator is extremely unstable, and there are some risks of weak data.


Trade tactics:

EURUSD pair closed previous day optimistically. Most technical indicators reversed upward. However, it is just movement to upper boundary of the range. Everything depends on how successfully the range 1.1400 – 1.1500 will be overcome. Still, there are no any grounds for euro’s sales now. For today we consider pair’s purchase from 1.1320 – 1.1330 in the first half of the day with the aim at 1.1440 – 1.1460, stop is at 1.1200.


Any opinions, advice, news, research, analyses, prices or any other information presented on this webpage is provided as general market commentary and does not constitute investment advice. "Vector Securities" shall not be liable for any loss, including loss of profit, which may arise directly or indirectly from the use of this information.

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