The dollar finally rose in price, which is largely due to panic on the stock exchanges. The fall of stock indices is usually accompanied by the strengthening of the dollar. In fact, not only American indices fall. Investors close their positions and withdraw money, and a well-known proverb says that money is a dollar. While the markets do not calm down, everyone prefers to wait out the storm precisely in the dollar, especially as it becomes more expensive. The ruble became the record holder in terms of the rate of weakening and the Bank of Russia made a considerable contribution to it, reducing the key rate from 7.75% to 7.50%. And you can say as much as you want that the market waited for this but the regulator lowered the rate in December from 8.25% to 7.75%. So, the rapid rates of easing monetary policy sooner or later should have triggered a decrease in ruble positions from foreign investors.
The Bank of England, on the other hand, supported the pound. And although the refinancing rate was not raised, they confirmed plans to tighten monetary policy this year. However, macroeconomic statistics in the UK are clearly not encouraging, as industry growth rates have fallen from 2.6% to zero. Apparently, the contributing pound added to the stagnation of the industry. And in continental Europe, not everything is as smooth with the growth in retail sales slowing from 2.8% to 1.9%.
Unlike last week, the United States came out with a number of important macroeconomic indicators. The most interesting are the data on inflation, which should remain at around 2.1%. If the forecasts are confirmed, there is no reason to fear that the Fed will revise its plans to raise the refinancing rate for the current year. However, the growth rate of retail sales should slow from 5.4% to 5.2%. Despite this, they came out simultaneously with the data on inflation, so that market participants cannot immediately pay attention. The rate of growth in producer prices should slow from 2.5% to 2.2%, indicating an increasing potential for reducing inflation.
In Europe, the industrial production for the growth rate is expected to accelerate from 3.2% to 4.1% and the second estimate of economic growth for the fourth quarter may indicate an acceleration from 2.6% to 2.7%. In turn, in the UK, inflation is expected to slow from 3.0% to 2.9% but in this case, it is likely to have a positive impact. The fact is that at the current refinancing rate, inflation is at 3.0% which is an extremely high indicator and frightens investors with the fact that the Bank of England is banally losing control over the situation. A slowdown in inflation reduces these risks. However, along with this, the growth of retail sales is expected to slow from 1.4% to 0.9%. The weakening of consumer activity with simultaneous decrease in inflation indicates a lowering of companies' profits, so the payback period of investments is greatly stretched.
Given all the existing forecasts, the probability of a small rebound is high, which will lead to a slight weakening of the dollar.
The EUR/USD pair has all chances to rise to 1.2375.
The GBP/USD pair may well grow to 1.3975.
The USD/RUB pair is likely to fall to 57.25.