FOMC Protocols, Pandemic, Data and New Zealand

25 Kas 2021

In terms of macroeconomic statistics, yesterday also included the weekend Thursday and Friday. So there was no end of the data. To begin with, the Reserve Bank of New Zealand raised the rate by 0.25% to 0.75%. This is the second increase this year. And although the New Zealand dollar has not yet appreciated this very much, it is worth taking a closer look at the kiwi, because in terms of the percentage differential here and now, and most importantly in the foreseeable future, it has a good handicap over the US dollar, and especially the euro.

By the way, about the euro. Yesterday's data on business sentiment in Germany from IFO came out worse than forecasts and past values, and most importantly, in light of the outbreak of the pandemic in Germany, there is no feeling that this is an accidental decline. Rather, it is the beginning of new problems for both the Eurozone economy and the euro. So the sale of the single European currency looks quite promising.

Especially against the US dollar, which continued to dominate the foreign exchange market. Yesterday's data generally played into the hands of this. What is at least the data on initial applications for unemployment benefits, which came out below 200K, and the States have not seen this since 1969 (!). So much for the bad shape of the US labor market.

Given the fact that inflation is not going anywhere (the PCE price index came out at 4.1%, which is more than twice the Fed's target), the US Central Bank has fewer arguments in favor of continuing the ultra-soft monetary policy.

In this regard, the publication of the minutes of the last meeting of the Federal Open Market Committee (FOMC) came in handy. The text of the minutes showed that the US Central Bank is ready to act and respond to inflationary pressures in the form of rate hikes. Plus there was a discussion about a more aggressive reduction of the quantitative easing program.

In general, the future of the dollar looks bright enough. The same cannot be said about oil. Which is clearly trying to put a good face on a bad game, refusing to go down. And at the same time, oil reserves in the United States and according to official data are growing. We continue to remind you that oil sales are a very promising undertaking in the horizon of several months.