The global currency market remains completely confused against the background of conflicting signals as it indicates the US labor market is still quite strong and the risks of a continued slowdown in the global economy on another. In particular, it may force the Fed to a long pause in order to begin the process of lowering interest rates.
Data on employment in the United States Published on Friday has shown again the strongest increase in the number of new jobs in March after their negative value in February. According to the data presented, the US economy received 196,000 new jobs against the forecast of growth to 175,000 and a revised upward February value of 33,000. The unemployment rate remained at the same level of 3.8%.
It is true that the data from the labor market continue to be positive, but as we have previously mentioned, the values of production indicators began to give signals to inhibition, which likely prompted the American President Donald Trump to urge the Fed to reduce interest rates once again.
"I personally believe that the Fed should lower the rate. They really slowed down (the economy of the country). There is no inflation," Trump said once again.
As long as the Fed holds on and makes it clear that it will expect clear and clear signals from the country's economy, as well as external factors, before taking decisive measures. By the way, the minutes of the March meeting of the regulator will be published this week, which will show whether there have been any changes in his views on the prospects for monetary policy or not.
Naturally in this situation, uncertainty and high risks Central banks, from which one could expect an increase in interest rates. Yet, central banks including the ECB, the RBA, the RBNZ and the Bank of England gave signals that they will not make any changes in their monetary policies. If the Fed signals about the likelihood of interest rate cuts, we generally get the feeling that many of the world's central banks, those who can afford it, will try to keep up with the American regulator. In this case, we will witness what has already been in the acute phase of the previous crisis of 2008–09 when the distillation banks lowered their interest rates and the largest of them, headed by the Federal Reserve, started economic stimulation programs.
In this situation, we expect in the near future the continuation of the stagnation of the currency market and the side range movements of the main currency pairs. In the future, one can hardly expect a noticeable drop in the dollar even if the Fed lowers interest rates since the US currency will begin to be considered as a safe-haven currency, as it was 10 years ago for example.
Forecast of the day:
The GBP/USD pair remains in a very narrow range of 1.2975-1.3180 in the wake of waiting for the next Brexit vote, as well as the publication of the Fed's Fed data protocol. If the pair holds above 1.3025, it can continue to drift to 1.3180.
The USD/CAD pair continues to form a triangle in the wake of the uncertainty of the future policy of the Fed and the Bank of Canada. Even rising oil prices do not put pressure on the pair. From a technical point of view, if the price keeps above the level of 1.3365, this can support the rise in the pair to 1.3425. However, if it falls below this mark, it may fall to 1.3310.
