The Fed released its interest rate decision on Wednesday. The Fed dropped the word "patient" from its outlook for monetary policy, but it lowered its forecasts for growth and inflation.
The central bank said interest rate hike will depend on the economic data. The recent released data remained mixed.
It is likely that we will see a deep correction after a stronger U.S. currency.
On Friday, the 13th of March the euro set a new 12-year low against the U.S. dollar at USD1.0461. One week later the single currency trades above USD1.0650 again - currently about 200 pips above the low. So far so bullish - or at least a phase of stabilization of the 'oversold' euro. Only if there would not have been the skyrocketing euro after the FED statement, trading as high as USD1.1022, just to be sold off a day later.
Next Fed's monetary policy meeting is scheduled to be on March 18. Investors speculate that the Fed will remove "patient" from its outlook for monetary policy as the labour market has continued to strengthen. The U.S. economy added 295,000 jobs in February, exceeding expectations for a rise of 241,000 jobs, after a gain of 239,000 jobs in January.
The U.S. Labor Department released the labour market data today. The U.S. economy added 295,000 jobs in February, exceeding expectations for a rise of 241,000 jobs, after a gain of 239,000 jobs in January.
The U.S. unemployment rate fell to 5.5% in February from 5.7% in January, beating forecast of a decline to 5.6%. That was lowest level since May 2008.
Analysts and investors are awaiting that the Fed will raise its interest rate this year, perhaps in the second half of the year. But the Fed Chair Janet Yellen said this week that the Fed is no hurry to hike its interest rate. She said that it will depend on the economic data. I suppose that it will also depend on the development of the economy in the Europe and Japan.
Recap: the single currency is in a long-term downtrend versus the greenback since July 2008, where the euro hit its all-time high at USD1.6063. In the last months trading became more volatile. We saw a massive slump in the first days of 2015. The downward resistance line (green) steepened again as the single currency continued to decline versus the greenback. The single currency hit a new 11-year low at USD1.1097 and then entered a phase of stabilization.
Greece yesterday submitted a request for an extension of its existing loan agreement. But German Finance Minister Wolfgang Schaeuble replied that the Greek loan proposal was "not a substantial proposal for a solution".
Another round of talks between Greece and the European Union was scheduled to take place today.
If both sides do not sign an agreement, it could mean that Greece will leave the Eurozone.
Eurozone's finance ministers meeting has ended without an agreement on extending the Greece's bailout on late Wednesday. The next meeting is scheduled to be on Monday.
The tone was friendlier after a summit of European Union leaders in Brussels on Thursday. Greece's Prime Minister Alexis Tsipras said the EU leaders covered an important part.
The Reserve Bank of Australia (RBA) Tuesday cut its interest rate to a new record low of 2.25%, down from 2.50%. The RBA said that the Aussie remains overvalued, despite the recent decline.
Falling commodity prices and a slowdown of the Chinese economy weigh on the Australia's economy. China is Australia's biggest trading partner.
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