The last few days have seen a weakening of the dollar. Various things are happening on the market, but it is clear that investors have a clearly defined direction. Even yesterday’s notes from the meeting of the American equivalent of the MPC did not knock us out of this trend.
FOMC Protocol
Yesterday at 8:00 PM, the minutes of the Federal Open Market Committee meeting were published. The notes suggest that we should expect interest rate cuts to be later than previously thought. The next meeting will be held in four weeks, so we still have plenty of time, but it is clear that expecting a reduction in the rate of at least 0.25% seems irrational now. Accordingly, decreasing chances of interest rate cuts should weaken the dollar. Or should it? However, for some reason, investors have decided that the continuation of the trend weakening the dollar against the euro, which started on Valentine’s day, is a good idea. This move not only negated these data, but also further strengthened the euro against the dollar to levels highest in over two weeks.
Gold Seeks Peaks
Customarily, a weak dollar translates into a bounce up in some commodities. On crude oil, due to unrest in the Middle East, this is not as clearly visible as on gold, whose chart strongly resembles the EURUSD chart in recent days. The reason is that gold has considerable inertia against local currencies, but its price is quoted in the US currency. As a result, when the dollar exchange rate falls, we often witness rising gold prices. It also works the other way around. The stronger the dollar, the cheaper an ounce of gold is, typically.
Construction Production Dives
Yesterday’s data does not deceive. The market has halted many investments to keep prices in the real estate industry after the expiration of a stimulus in the form of a 2% loan. Within a year, construction and assembly production fell by 6.1%. Just a month ago, it grew by an impressive 14%. Work on another first-time home purchase support program is ongoing. It is interesting how long we will believe that the housing policy conducted from program to program is a real solution to housing problems.
Today in the macroeconomic data calendar, pay attention to:
12:00 – Turkey – interest rates decision,
13:30 – Eurozone – the minutes from the ECB meeting,
14:30 – USA – the number of unemployment benefits applications.
Maciej Przygórzewski – the chief analyst at InternetowyKantor.pl and Walutomat.pl
