The Fed is unlikely to deviate from its monetary policy
Following the criticism of the actions of the Federal Reserve System and Donald Trump, the Institute for Economic Policy, which published its next report, did not stand aside either. Perhaps this is a coincidence, but it emphasizes exactly the points that the president of the United States drew attention to.
The study said that the United States should not rush to raise interest rates, as the potential price of overheating of the economy is offset by the potential benefits of faster and more adequate wage growth.
Despite this, I do not think that the Fed will deviate from its policy. Today, the minutes will be published from the last meeting of the Fed, in which, most likely, further emphasis will be placed on the growth of inflation and on the transition to a neutral interest rate.
Speech by the representative of the Federal Reserve Robert Kaplan on Tuesday evening only led to a weakening of the US dollar’s position in the market against most of the world’s currencies. As Kaplan noted, the Fed continues to give preference to a gradual increase in interest rates, and at least three or four more increases are planned ahead. Kaplan wants the Fed to return the rates to a neutral level, which, in his opinion, is about 2.50% -2.75%.
Despite the desire to generally lead to the normalization of monetary policy, the representative of the Federal Reserve noted that the state of the yield curve will be important for the course of the Fed’s thoughts.
As for the technical picture of the EURUSD pair, the growth this week has reversed the downward trend that we have observed recently, but the further upside potential of the euro will be limited to large resistance levels around 1.1620 and 1.1680. If the risk assets are reduced after the publication of the FRS protocols, the levels 1.1500 and 1.1450 will be of good support, from which it will be possible to build the lower boundary of the already new uplink.
Quotations of oil rose slightly yesterday to the publication of data, which indicated a reduction in supply in the world market and a decline in stocks in the US. According to the report of the American Petroleum Institute, US oil inventories fell by 5.2 million barrels last week, while gasoline stocks fell by 930,000 barrels.
However, today’s data from the Energy Information Administration of the EIA of the US Department of Energy will be more important. Analysts expect that the data will also show a reduction in oil reserves last week by 2 million barrels, which will lead to the growth of quotations.