Positive macroeconomic statistics continued to be released then. Non-Farm Payrolls rose to better-than-expected 295 thousand. Unemployment in the US fell to its weakest since May, 200 8 (5.5%). The following days some investors had doubts that with good statistics taken into consideration, Federal Reserve System would hike the rate. However, Dollar Index edged higher as ECB launched the bond-buying program. We remind that the amount was announced in January: the bank would spend €60 bln every month til September, 2016. Yet, at the very start quantitative easing pulled down the euro. Dollar Index exceeded 100 despite the fact that there were no positive macroeconomic statistics. Vice versa, economy demonstrated some negative dynamics: retail sales in the US has slumped for 3 straight months, the first time since 2012.
The payback was soon to occur and since the mid-March US Dollar Index has marked a sharp decrease. After a while, at a regular Fed meeting, Janet Yellen stated that they were not in a hurry with rate hike, while inflation is low and American economy offers enough jobs. We agree but another factor is worth mentioning – the strong dollar may influence Fed decision. In theory, if US Dollar index plummets, Reserve System may raise the rate before macroeconomic situation changes.
When it comes to the euro, we suppose that the common currency started growing as soon as investors doubted that rate hike was imminent. In our opinion, EU economy doesn't show clear signs of recovery. However, due to 20-25$% surge in stock indices since the beginning of the year, the demand for the single currency was supposed to increase.
Important macroeconomic data to be released soon:
The United States: March, 27 — Final GDP (Q4), April, 1— ISM Manufacturing, April, 3 — Employment Situation;
Eurozone:March, 30 — Consumer Confidence, March, 31 — Employment Situation,April, 8 — Retail Sales;
Japan:March, 26 — Inflation and Employment, March, 29 — Industrial Production,March, 31 — Tankan Survey.