The situation on the foreign exchange market remains ambiguous and is characterized by the absence of a clear and distinct trend. A number of important reasons have a chilling effect on markets. First of all, these are clear signals of slowdown, which the world economy demonstrates, and secondly, a clear signal from the Fed, which indicates that the regulator will continue to carefully consider the likelihood of further increases in interest rates.
We have previously repeatedly pointed out these problems and consider it necessary to recall this since the lack of certainty carries significant risks of high volatility. Thus, the economic statistics data from China released at the beginning of the year clearly indicate a slowdown in economic growth in the country, and the country's GDP data presented today only confirms this.
According to published values, GDP declined in annual terms in the fourth quarter of last year to 6.4% from 6.5%, which turned out to be in line with forecasts. The quarterly indicator value decreased to 1.5% from 1.6%. True, the volume of industrial production increased compared with the previous period to 5.7% from 5.4%, while it was expected to decrease to 5.3%, but this does not change the overall picture of its gradual decline since the middle of last year.
The slowdown in economic growth has already had a negative impact on the rates of the Australian and New Zealand currencies. If the further slowdown process continues, then these currencies may be under pressure against the US dollar, if the Fed decides to make the two rate hikes promised earlier, this will definitely lead to a decrease in the AUD / USD and NZD / USD pairs.
In relation to the USD / CAD currency pair, a lot will depend on the dynamics of crude oil prices, which are currently supported primarily by OPEC +, aimed at reducing crude oil production in order to have a supporting effect on it.
The currency pairs EUR / USD and GBP / USD are hostages to the uncertainty surrounding Britain's exit from the EU. Despite the fact that T. May, the Prime Minister of Great Britain, retained her position, this did not add to certainty, but only contributed to a certain detente followed, in our opinion, by an increase in the tension around Brexit. Assessing this state of affairs, we believe that the sterling will be extremely active in responding to this topic, which remains the most important.
Regarding the dynamics of the eurodollar pair, we believe that in the short term, it will consolidate in a narrow range against the background of negative news from the eurozone, which indicates a noticeable decrease in the growth of the regional economy and a signal from the Fed about a more cautious attitude to the process of further raising interest rates. These two events balance each other and do not allow the pair to move in a certain direction.
Forecast of the day:
The currency pair EUR / USD remains in the range. It can grow to 1.1385. If this level resists, then there is a probability of a resumption of its local decline to 1.1345.
The currency pair GBP / USD is trading above 1.2855. If it overcomes this mark, there is a probability of its decline to 1.2800.
