The US dollar continued to strengthen its position against risky assets, especially against the euro: Federal Reserve Chairman Jerome Powell, in his last public speech this week, said that the US central bank will continue to wait until the economy "fully recovers from the coronavirus pandemic", and only then will begin to wind down emergency monetary support. Strong data on the recovery of the US labor market and a more active economic growth rate in the 4th quarter of this year also supported traders betting on further strengthening of the dollar.
"Once we have made significant progress in achieving our goals for inflation, the labor market, and the growth rate of the economy, only then will we begin to gradually reduce the amount of Treasury and mortgage-backed securities we buy. In the longer term, we have developed a system of assessments by which we will raise interest rates," Powell said Thursday in an interview on national public radio. Let me remind you that last week, the head of the Federal Reserve and his colleagues from the Federal Open Market Committee, kept interest rates close to zero and confirmed that they will continue to buy bonds for $120 billion a month until "significant progress" is made in achieving the goals.
Today there was a rather interesting interview with the former President of the European Commission, Jean-Claude Juncker, who spoke a lot about the mistake of the EU, which was overly cautious about stimulating support measures, having driven itself into the trap of a slow program of vaccination of the population against Covid-19. Waging a stupid war with Britain, accusing them of failing to fulfill their obligations, only jeopardizes the superiority of the EU's free-trade principles. Juncker, who was succeeded in 2019 by Ursula von der Leyen, compared the EU's approach to vaccination in a negative light, while praising the UK authorities, which coped much faster with the introduction of the vaccine. "I am not in favor of the European Commission's vaccine export authorization mechanism, under which officials would be empowered to prohibit shipments. This could seriously damage the reputation of the European Union," Juncker told BBC HARDtalk. Juncker urged both sides to abandon the war over vaccines and enter into dialogue since it is unlikely that anyone will benefit from the deterioration of relations. Let me remind you that yesterday, the European Commission officially announced the introduction of export permits, which will block the supply of vaccines to countries with a high level of vaccination. First on this list is the United Kingdom.
As for the fundamental statistics published today: according to the GfK market research group, consumer sentiment in Germany will improve in April this year after the tight isolation is eased and the infection rate is reduced. The consumer sentiment index rose to -6.2 points in April from -12.7 points in March. Economists had forecast a decline of only -11.9 points. However, it is worth recalling that this week, another wave of coronavirus began in Germany and several other countries, as a result of which the growth in the number of infections again went up. In this regard, it is rather doubtful to expect that consumer confidence will continue to improve.
However, the data briefly supported the euro at the very beginning of the European session, after which the pair continued its decline. As for the technical picture of EUR/USD, the bears failed to support the base of the 18th figure for the third time, which led to a new wave of decline in the trading instrument. The nearest levels that can somehow limit the downward potential of the pair are seen in the area of 1.1760 and 1.1710. It will be possible to say that the bulls have managed to gain control of the market, or at least to stop the bearish trend after fixing above the resistance of 1.1840. Such a scenario will definitely lead to an upward correction in the area of the highs of 1.1900 and 1.1930.
As for other, not very important fundamental statistics: several reports on the money supply of the eurozone, which grew at a slower pace, as well as lending to the private sector, which recorded more stable growth – all this did not affect the direction of the euro, which continues to experience serious growth problems this week. The report of the European Central Bank said: the monetary aggregate M3 decreased to 12.3%, while it was predicted that the indicator will remain unchanged at 12.5%. Lending to the private sector in February, on the contrary, increased by 5.1%.
Business confidence in France remained stable in March, as manufacturers were optimistic about the overall outlook for production in the early spring of this year, amid the lifting of another national lockdown on the economy. The index in the manufacturing sector was 98 points, while economists had expected the index to improve to 99 points.
GBP
As for the sterling, buyers coped with their task and managed to keep the pair near local weekly lows. The further direction of the pound depends on the activity of the bulls at the level of 1.3730, which they have already knocked on several times today and which acts as the upper limit of the side channel of 1.3730. A break in this range will strengthen investors' expectations for a larger recovery of the pair in the area of 1.3790 and 1.3850. A break in the support of 1.3680 will certainly lead to a larger sell-off of the sterling, with an exit to the minimum of 1.3645 and an update of the base of the 36th figure.
Data from the Confederation of British Industrialists on retail sales supported the pair in the first half of the day. The opening of retail stores in April this year also gives confidence in the improvement of the indicator. About 45% of the respondents surveyed said that sales volume declined sharply in March, but about 17% still forecast growth and a recovery in sales in April.
