The published minutes of the March Fed meeting, which investors were looking forward to with great impatience, did not bring anything of what they hoped for. Namely, the markets expected that the American regulator would clarify its position regarding the prospects for interest rates, the beginning of their likely decrease but that did not happen. The uncertainty factor in its possible actions will persist.
Earlier, the markets hoped that the signals of slowing the growth of the American economy against the background of the US-Chinese trade war, as well as strong pressure from President Donald Trump in his desire for the Central Bank to begin the process of lowering interest rates, would force the Fed to show softness and make it clear if negative trends continue. Trends in the national economy that it will go on lowering the cost of borrowing. However, the published protocol showed that the majority of the heads of federal banks believe that for now, it is necessary to show patience and watch the developments. While most managers expect interest rates to remain unchanged throughout the year, they have not shed any light on whether they will change at all in the foreseeable future. According to the Fed, the main reason that forces them to be "patient" is significant uncertainty on the external situation such as the situation around Britain's exit from the EU, the trade war with China and the continuing possibility to slow down the growth of the American economy.
The foreign exchange market began to operate even before the publication of the protocol in the hope that it would shed light on the prospects for interest rates. The dollar began to decline and the main currencies add against it. The market seems to have little interest in what will be. In fact, in this Protocol, since on the one hand, they are sure that the fed will still have to go to lower interest rates, and on the other, he has already made sure that, as a "tail" can confidently wag the "dog", that is the US fed. Therefore, it can get away if not by hook or by crook, which course, in this case, many market players seem to have started laying on the global weakening of the US currency.
Forecast of the day:
The EURUSD pair is trading in a very narrow range after the outcome of the ECB meeting and the release of the Fed's protocol, as well as the extension of the Brexit tragedy until the end of this year. It is likely that the pair will remain in the "sideways", however, if it overcomes the 1.1285 mark, it can grow towards 1.1325 for today.
The AUD/USD pair has adjusted after reaching a local maximum of 0.7175and can continue to decline to 0.7140, before resuming growth to 0.7220 if it overcomes the level of 0.7160.
The material has been provided by InstaForex Company - www.instaforex.com