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Euro stabilizes amid weak inflation in Germany

Euro stabilizes amid weak inflation in Germany

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Erik Holm - Head of media

The EUR/USD currency pair is trading around $1.2325, almost unchanged at the moment. Data on the decline in the euro from different regions of Germany are approaching milder inflation year on year.

Currency, ranges of price fluctuations are limited, as markets are waiting for important data from US Central Bank Chairman Jerome Powell.

The pair EUR/USD is growing slowly but daily. It briefly broke the figure of 1.2300 and was trading at 1.2354 this week, but so far cannot establish a clear direction.

The head of the US Central Bank Jerome Powell will turn to the parliamentary special committee on inflation and monetary policy. Expectations before the event are high, as there will be the first steps on this issue.

In general, Powell is expected to follow Yellen's path, but there is a good chance that he will prefer to calm the stock market and, therefore, try to meet the expectations of more than three rate hikes this year, which will not benefit from a stronger dollar.

At the same time, the EU has published its numbers for January and is going to publish sentiment indicators for February inflation will be ahead of Powell’s statement, while durable goods orders in the US will be canceled in January.

Also, European indices are mixed with their initial levels, which change little daily. Note that the yield on US Treasury bonds increases their recovery, but remains below the level of Friday closing.

The ruble got the plus value against the weakening Forex dollar

The ruble got the plus value against the weakening Forex dollar

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Jim Anderson - Public Relations

The ruble got the plus value against the weakening Forex dollar in anticipation of the Fed rate cut and amid cautions demand risk due to expectations of a possible conclusion of a US-China trade deal in November. Local support for the ruble remains foreign interest in OFZs, pending another reduction on the CBR key rate this year after the Russian regulator has revised its inflation forecast towards a slowdown.

A limiting fact is uncertainty for the EM segment of the result of the presidential election in Argentina, where the representative of the opposition Peronist party won. By 11.25 Moscow time, the USD/RUB pair was near 63.79, and the ruble was gaining 6 kopecks, while in the morning it had fallen to 63.96.

Against the euro, it remains in the red, losing 4 kopeks (70.76), thereby reflecting the current strengthening of the single currency against the dollar at forex. The probability of a decrease in the Fed rate on Wednesday by 25 bp is now estimated at 90% and the probability of a decrease of the CBR key rate in December at 25 bp is 57%. EM currencies have shown, since the beginning of the day, mainly strengthening against the US dollar, but Brent oil went negative after reaching a new October high of $62.16, and now a barrel is valued at $61.78 (-0.4%).

The dollar is falling, the yuan is recovering amid news of trade negotiations

The dollar is falling, the yuan is recovering amid news of trade negotiations

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Erik Holm - Head of media

In the morning hours of the European trading session on Thursday, the US dollar depreciated amid a large number of conflicting reports about the upcoming trade talks between the US and China, which should continue in Washington today.

The final settlement of the trade conflict between the two countries seems unattainable after the introduction of mutual sanctions against specific companies this week. However, judging by the reports, both parties may accept some more abridged versions of the agreement in order to mitigate the blow to the economies of the two countries. Due to the trade conflict, the growth rates of both the Chinese and American economies have slowed sharply this year.

By 8:30 London time, the US dollar index, which shows the purchasing power of the dollar against a trade-weighted basket of six major currencies, fell 0.3% to 98.547. The US dollar also fell 0.3% against the official and offshore yuan.

For the first time, the euro exceeded $1.1. By 8:30 London time, the euro rose 0.4% to $1.1041. This happened despite the report on the volume of industrial production on France, which turned out to be worse than analyst's forecasts, as well as data on German exports for August, which also turned out to be worse than forecasts.

The dollar is trying to grow against euro

The dollar is trying to grow against euro

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Jim Anderson - Public Relations

During today’s trading, the dollar does not show significant changes to most major currencies, while the Japanese yen has risen after the release of weaker-than-expected US statistics, reaching a weekly high against the dollar.

At 8:00 London time, the euro was worth $1.0951 against $1.0959 at the close of the last session. Paired with the Japanese national currency, the single European currency fell at the same time to 117.30 yen compared to 117.46 yen on Wednesday.

The ICE Dollar Index, which shows the value of the US dollar against six major world currencies, rises 0.05%. The WSJ Dollar indicator, which tracks the dynamics of the dollar against 16 major world currencies, is adding 0.01%.

What's going on with dollar and yen after the Fed meeting

What's going on with dollar and yen after the Fed meeting

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Jim Anderson - Public Relations

During today's Asian trading, the dollar is getting cheaper against the euro and other world currencies at the decision of the Federal Reserve System (FRS) to lower the interest rate.

At the same time, the yen is growing after the Central Bank of Japan refrained from changing monetary policy. As of 7:22 London time, the euro was worth $ 1.1044 against $ 1.1030 at the close of the last session.

The value of the single European currency against the Japanese national currency was at the same time 119.25 yen compared to 119.62 yen on Wednesday. For the dollar, at 7:22 London time, they were giving 107.97 yen against 108.45 yen on the eve.

The ICE Dollar Index, which shows the value of the US dollar against six major world currencies, is down by 0.14%. WSJ Dollar indicator against 16 major world currencies, is losing 0.06%. Yesterday, the Federal Reserve expectedly lowered the federal funds rate by 0.25 percentage point, to 1.75-2%.

Also, the Central Bank management published updated macroeconomic forecasts. In particular, the forecast for US GDP growth for 2019 was improved to 2.2% from the expected 2.1% in June, and by 2021 to 1.9% from 1.8%. The forecast for 2020 is left at 2%.

Meanwhile, the Bank of Japan today didn’t begin to change the basic parameters of the monetary policy (MCP), although it called for a review of economic and price changes in October. As expected, the bank left the target yield on 10-year government bonds of Japan at about zero, the interest rate on deposits of commercial banks in the Central Bank at minus 0.1%.

At the same time, the leadership of the Japanese Central Bank noted a slowdown in the growth of foreign economies and the associated risks, which encourages it to pay closer attention to the possibility of losing momentum to achieve a target inflation rate of 2%. “Given this situation, the bank will review changes in the economy and prices at the next meeting when it updates the forecast of economic activity and prices”, the Bank of Japan said in a statement.