The US Dollar is not yet giving up

At first, we want to briefly summarize the previous week. For the U.S. dollar index it was the most unsuccessful for the last nine months. Generally, the U.S. currency started to decline after weak data on the labor market in March, appeared on April 4. On Wednesday the March meeting minutes of the Open Market Committee, the so-called FOMC Minutes, were released, which added more negative. Prior to this, most of the participants of the Forex market assumed that the discount rate of the US will reach 2.25% at the end of 2016. However, in FOMC Minutes it was noted that such predictions are overstated. Now investors do not have a consensus regarding the level up to which the Fed may raise the rate. However, they still believe that the first increase will take place in July of the next year. In general, investors regarded the materials of FOMC Minutes as a step towards easing monetary policy. As a result of all this, the Dollar index declined for five consecutive days and only on Friday it was able to rise a bit. Market participants decided to close "short" positions after the release of positive macroeconomic data. On Thursday evening for the first time in the United States it became known about the quantity reduction of registered unemployed up to 300 thousand people per week. This is the lowest since pre-crisis in May 2007. On Friday, the increase of the index of consumer confidence from the University of Michigan exceeded forecasts. Note that the volume of the consumer market in the U.S. is about 70% of GDP.

This week's key economic data in the United States will be released on Monday and Tuesday. On the first day of the week retail sales for March will be released and on Tuesday 2:30 pm CET inflation will be released also for March. Most likely, they will support the U.S. Dollar. Next, on Wednesday and Thursday less significant economic information on the real estate market for March and the labor market for the week will go out, respectively. On Wednesday economic review "Beige Book" for April will be released, and the focus of investors will be on the speech of Janet Yellen, the Chairman of Fed. It is expected to begin at 6:15pm CET. On Friday, in the United States trading activity will be minimal, as many market participants will celebrate "Good Friday" before Easter.

With the decline of the Dollar index, the appreciation of the Euro was noticed last week. However, it has been modest. ECB representatives have repeatedly demonstrated a desire to begin a program of so-called "quantitative easing." In fact, this means running the monetary emission and redemption of government bonds. That is almost a complete copy of actions by the U.S. Federal Reserve System. As we see in case of the Dollar, the emission is not beneficial for the exchange rate. Therefore, market participants bought the Euros very carefully, and it could not update the maximum. Over the weekend, the ECB President Mario Draghi said that a possible "trigger" for the start of quantitative easing may become excessive strengthening of the Euro. After that market participants decided that ECB does not want to increase the unit of the currency above $ 1.39 Dollars per Euro. Let's see if it will become a full-fledged resistance level. Key economic data in the Eurozone will come on Wednesday. At 11:00am CET time the CPI for March will be declared. According to preliminary estimates, it will not change and will be 0.5%. This may weaken the Euro as in this case, inflation will be much below the target level of ECB - 2%. This increases the likelihood of the ECB monetary emission. With the help of it, it is supposed to avoid the threat of deflation.

At the end of the review, we would like to tell about significant macroeconomic information on other currencies. On Tuesday inflation in the UK and New Zealand, as well as the producer price index in Switzerland will be released. On Wednesday data on industrial production in Japan will be announced, and the meeting of the Bank of Canada will take place. As expected, the discount rate will remain at 1%. On Thursday inflation in Canada will be released, and a press conference by Haruhiko Kuroda, the head of the Bank of Japan, will take place. We recommend Futures market participants on Wednesday morning to draw attention to important data of the Chinese economy: GDP for the first quarter, industrial production and retail sales for March. China is the world's largest buyer of goods.