EUR / USD, GBP / USD
As a result of yesterday, the euro fell by 84 points while the British pound declined by 58 points. The main driving force was the speech of the new head of the Fed, Jerome Powell despite the fact that he did not say anything new. Powell assessed the economic growth in recent months in a positive way, paid attention to the advantageous effects of investment projects in the future, and assessed the risk of recession at the current time as low. Regarding the pace of rate increases, he said that they should be raised "gradually." Actually, the very positive tone made the players of the market cover the positions in the shares and in the counter dollar currencies. In fact, investors did what they can to prepare for Powell's expected aggressive speech. A number of investment companies once again "found a hint" for a fourfold increase in the rate.
However, it is important to note that the macroeconomic data was disappointing both in the euro area and in the US, which was no less a correction. The harmonized CPI in Germany for the current month added 0.5% against expectations of 0.6% and a year on year total of CPI fell from 1.7% to 1.4%. The index of production sentiment in the euro area dropped from 9.0 to the expected 8.0. In the US, the volume of orders for durable goods in January fell by 3.7% while waiting for -2.4%. Basic orders for durable goods fell by 0.3% against expectations of growth of 0.4%. The index of housing prices for December was at 6.5% y / y against 6.7% y / y in November. The foreign trade balance amounted to -74.4 billion dollars against the forecast of -72.3 billion. The growth was shown by the index of consumer confidence in February (130.8 against 124.3 in January) and the index of industrial activity in the Richmond region for the current month (28 against 14 in January).
Despite the strong tension of the "hawkishness" of Powell's speech, bearish sentiment in the markets can be supported by thickening the colors of the Italian elections in the picture. The latest polls show that Berlusconi's coalition is supported by 35.6% of voters, the Rentsi coalition is backed by 27.9%, and the "5-star" party has 28.6%. A technical government cannot be avoided. There is room for stirring up passions right up to the collapse of the eurozone. In the current situation, we expect soft support for the "bears," just to benefit from the first move in Powell's speech. In case of a strong development of the topic of the eurozone's collapse, one can speak of a large-scale turn of the market towards strengthening the dollar.
Macroeconomic indicators are not in favor of bulls today. If the forecasts are justified, the euro area's CPI for February will fall from 1.3% y / y to 1.2% y / y and the basic CPI may remain at 1.0% y / y. The US GDP for the fourth quarter in the second estimate may be lowered from 2.6% to 2.5%. The index of business activity in the manufacturing sector of the Chicago region in February is expected to decline from 65.7 to 64.2. Unfinished sales in the secondary real estate market in January could increase by 0.4% against 0.5% from a month earlier.
As a result, we are waiting for the decline of the euro to 1.2120 and the decline of the British pound in the range of 1.3800 / 40.
AUD / USD
Yesterday, the Australian dollar could not resist the whole market and lost 65 points. Following the dollar, commodity markets declined. Oil fell by 1.5%, iron ore by -0.3%, copper by -1.3%, and gold by -1.03%. The probability of a March Fed rate hike rose to 84.5%.
The American stock market sank by 1.27% (S & P500) yesterday, which also affected the current state of Asian indices; S&P / ASX 200 -0.70%, Nikkei 225 -1.14%, and China A50 -1.86%.
Tomorrow, data on private investment for the fourth quarter will come in Australia. The forecast implies an increase of 0.9% against 1.0% in the third quarter. The expected weakening of the index in new events can be interpreted by the media as a significant deterioration.
We are waiting for the "Aussie" at 0.7735 and further at 0.7690.