The United States of America

USD is weakening against EUR, JPY, and GBP.

In February, the core personal consumption expenditure index fell from 0.5% to 0.3% MoM and from 2.9% to 2.8% YoY, justifying preliminary estimates. Thus, the slowdown in inflationary pressure continues steadily, convincing investors that the US Fed will keep interest rates the same in May and begin lowering them in June. In addition, personal income increased by 0.3%, less than expected by 0.4%, and expenses by 0.8%, significantly exceeding the expected 0.5%. It may mean continued risks of rising consumer prices, but for now, investors don’t consider the data.

Eurozone

EUR is strengthening against USD but has ambiguous dynamics against JPY and GBP.

Today is a public holiday in most Eurozone countries, so financial institutions are closed, and investor activity is reduced. However, market participants are monitoring comments from European Central Bank (ECB) officials regarding its future actions. Thus, today, the head of the Bank of France, Francois Villeroy de Galhau, said that the regulator would probably start with a moderate reduction in interest rates, but it did not matter much whether it happens in April or June. The official added that after the first cut in borrowing costs, it might not continue at the next ECB meeting. This position coincides with the expectations of most economists surveyed by Reuters.

The United Kingdom

GBP is strengthening against USD but has ambiguous dynamics against JPY and EUR.

Yesterday, Bank of England board member Jonathan Haskel said that despite the overall slowdown in inflation, underlying consumer price growth remained high, so it is premature to adjust monetary policy. The official is a “hawk” and one of the few representatives of the regulator who, back in January, allowed a new increase in borrowing costs. According to a March survey of British citizens on inflation expectations conducted by Citigroup Inc. and YouGov Plc., the majority of respondents expect that in 12 months, the increase in consumer prices in the country will be 3.3% instead of 3.6% as previously expected. Forecasts for an increase in the indicator over 5–10 years have decreased from 3.5% to 3.4%.

Japan

JPY is strengthening against USD but has ambiguous dynamics against EUR and GBP.

The Tokyo metropolitan region’s consumer price index remained at 2.6% YoY, but the core rate fell from 2.5% to 2.4%. Although overall inflation in the country’s most economically developed region is above the target of 2.0%, experts see its slowdown as a negative signal. Preliminary data showed industrial output fell 0.1% in February instead of an expected rise of 1.2%, confirming the weakening of the domestic economy and raising fears among investors that the Bank of Japan will take a significant break in its monetary tightening cycle.

Australia

AUD is strengthening against USD but has ambiguous dynamics against EUR, JPY, and GBP.

After the Chinese government lifted increased tariffs on Australian coal, barley, and wine, officials intend to seek the removal of similar barriers to the export of beef and seafood. The likelihood of a positive resolution of these issues is quite high, as political and economic relations between China and Australia are improving. Let us recall that Beijing introduced several protective duties on Australian goods back in 2020 when official Canberra called for an investigation into the origins of the coronavirus but now, the dialogue between the countries has resumed.