The last two trading days are marked by negative market dynamics, as equity indices are under pressure. On Wednesday, Europe was under pressure and closed in the red, as the European currency and European stock indexes are strengthening the decline ahead of the upcoming parliamentary elections in Italy on March 4. American markets also closed in the red zone - playing out J. Powell speech in Congress and expectations of 4 rate hikes, as well as a decline in commodity markets and primarily oil. Today, European markets are losing, US futures for indices in the red.
In the FOREX currency market, USD dollar continued to develop the success of recent days - the dollar index reached a mark of 90.73 points, the highest levels since mid-January. At the same time, EUR / USD finished February with a minor note updating its minimum month level, while retaining the potential for further decline amid political risks.
Yesterday's data on the German labor market met expectations, and the reduction in the number of unemployed people turned out to be even stronger than expected. Probably, inflation remains the only indicator that does not please investors yet. Analysts' expectations were confirmed and the consumer price index for the month as a result fell from 1.3% to 1.2%. Such weak data will certainly delay the change in rhetoric from the ECB.
It is likely that at the next meeting the European regulator will leave its monetary policy unchanged, which will be a deterrent for the euro. However, political factors are putting more pressure on the euro. The elections in Italy, which can present surprises, as well as the vote of the German SPD on a coalition agreement, could lead to stronger European currency sale-off before the weekend, or Monday EUR / USD market start with a negative gap.
Yesterday, US GDP data was revised for the worse, declining from 2.6% to 2.5%, the index of unfinished real estate sales sank 4.7% with the forecast for growth of 0.4%, Chicago PMI also decreased, 61.9 against 65.7 a month earlier. All these reports are unlikely to affect the decision of the Fed on rates, but they can influence the behavior of market participants and their fears that the US economy is not so strong right now to implement faster rates of rate hikes.
Today, Jerome Powell will make a speech again, this time before the profile committee of the House of Representatives, but the impact of this speech may not be so strong. In addition, investors will now follow the PMI of the manufacturing sector in the US, Germany and the EU, as well as the dynamics of the unemployment rate of the European Union.
In general, the global markets continue to develop a negative momentum after the publication of statistics on US and China economies, along with the plans of the Fed to continue raising interest rates, limiting the amount of liquidity available to market participants and reducing interest in risk. FOREX market continues to trade under the influence of stronger US currency.