Markets are once again bracing for US Trump trade policy “on the fly”. With Rex Tillerson out of the way, Larry Kudlow supporting punitive actions against China and Peter Novara and Wilder Ross steady daring Trump on just about anything could happen today. White House officials indicate that Trump will announce tariffs on Chinese imports this afternoon. The objective according to now turned narrative it Trump titter policy is aimed at curbing theft of US technology. There has been limited indications on size and scope of the tariffs, which indicated in our view a making it up as he goes strategy. We find it hard to think of any actions that accomplish the desired effect.
As broadly expected the FOMC lifted the Feds fund rate targets by 25bps to 1.50% - 1.75%. Fed members adjusted their forecast so that they reflect their more optimistic view of the US economy. The press statement also underwent changes, all positive. However, despite these efforts, the US dollar has been under heavy selling pressure since yesterday evening. The dollar index fell 89.3 following the announcement and kept losing ground on Thursday morning to reach 89.40 as investors seemed disappointed.
The decision of the Fed to increase the interest rate by 0.25%, and adhere to the previously planned plan for further tightening of monetary policy, was negatively welcomed by investors, which caused a decline in both the dollar and the major US stock indexes.
If dollar buyers were disappointed that the Fed did not directly state the probability of 4 rate increases this year, then the stock market participants are disappointed that the Fed has confirmed the direction of its monetary policy for its further tightening.
Seven of the fifteen participants in the last meeting of the Fed still expect at least four increases this year.
The Fed revised its GDP growth forecasts up by 2.7% this year and 2.4% in 2019 against earlier forecasts of 2.5% and 2.1%, respectively. The Fed also expects that unemployment, which remained at 4.1% in October, will fall to 3.8% this year against 3.9% in the December forecast.
With the opening of today's trading day, the major US indices are declining.
The EUR/USD pair follows broad market trend today, backed by retreat of the US dollar against its major rivals, while refreshing its weekly highs at 1.2388 spot. Broad sell off of the US dollar is mainly attributed to not enough hawkish outcome of the Fed meeting. As it was widely expected the regulator increased its interest rate by 25 bps up to the level of 1.75%, however, investors by that moment had already managed to fully price in this decision of the Fed, therefore the reaction on it was limited. Markets were expecting the revision of “dot plot”, which would imply an additional rate hike this year, however, it didn’t happen. Nevertheless, the regulator did the revision of its plans regarding the rate, indicating 3 rate hikes next year, instead of 2 previously planned, but the market payed little of the attention to these comments. In gener
Today, we will review the AOTI-EA, created as an assistant for the All-in-One Trade (AOTI) indicator. The EA-assistant is based on the Simplest Strategy of the Levels (SSL). The AOTI-EA works in conjunction with the AOTI indicator and the AOTI-EA is available for free to anyone who bought the indicator. Now let’s look at this in details.
All-in-One Trade (AOTI) indicator URL
Product Name: AOTI-EA Assistant (for the AOTI indicator)
Currency Pairs: EUR/USD, GBP/USD, EUR/GBP/ EUR/JPY, and USD/JPY
Elected on Sunday 18 March with a majority of 76%, President Vladimir Vladimirovitch Poutine confirms his fourth and (supposedly) last mandate as President of the Russian Federation, giving a strong signal on international stage and confirming his popularity among the Russian public opinion. Regardless of his victory against the other seven presidential opponents, President Putin will be supporting multiple projects that concern improvements in foreign direct investment, further privatization within the economy, access to qualified labor force and credit financing enhancement for small and medium-sized businesses.
As the economy slowly recovers from previous recession in 2015, with 2018 Gross Domestic Product y/y estimated at 1.80% and February Consumer Price Index y/y given at 2.20%, the Central Bank of Russia is expected to show a further dovish stance on its next monetary policy meeting on Friday 23 March, reducing current interest rate given at 7.50% by 25 basis points.
According to the Federal Government’s Expert Group published, Switzerland is also expected to take advantage of the broad-based economic recovery. The SECO revised its growth forecast to the upside as it anticipates that the dynamic recovery will continue. The economy is expected to growth 2.4% in 2018 compared to December estimate of 2.3%. Similarly, 2019 gross national product growth should reach 2%, compared to 1.9% previously estimated. The moderate slowdown expected for 2019 is mostly due to a slackening in construction investments (1.1% growth in 2018 and 0.3% in 2019). Personal consumption forecast has not been revised and is expected to expand at an annual pace of 1.4% in 2018 and 1.5% in 2019.
The EUR/USD pair corrects higher this Wednesday after yesterday’s drawdown, triggered by bullish tone of the US dollar and disappointing German Zew surveys. Today it is all about the Fed meeting. It is widely expected that the Fed will increase its interest rate by 0.25%, so investors are more interested in comments of the head of the regulator. The market could witness notable volatility if Mr.Powell revises rate dot plot to four for 2018. Also, markets will await for any changes in long-term forecast of the Bank and clarity regarding impact of trade war on the US economy. Besides the Fed interest decision, the US will also publish today the data from the housing market, however, it is expected that markets won’t pay any attention to it.
The second trading day, the main US indices are traded in a narrow range. Traders paused before the decision of the Fed on rates, which will be published today at 18:00 (GMT).
Virtually all market participants believe that interest rates will be increased. As expected, the Fed will raise the range of key interest rates by 25 basis points, to 1.50% -1.75%. According to the CME Group, the probability of an increase is estimated at 95%, and this decision is already included in the price.
Greater interest for investors will be presented by a press conference of the new head of the Fed, Jerome Powell, which will start at 18:30 (GMT). Investors will seek in his comments signals for the possibility of faster monetary tightening. The steady rise in inflation and the growth of the US economy forced some investors to put in price 4 rate hikes this year. If Powell confirms this probability, the dollar will rise sharply, and US stock indices will decline.
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