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March in Forex: The Fed is ruled by the ball

A statement by the head of the Federal Reserve Bank of New York, William Dudley, that the Fed does not have to wait until the White House announces the details of the tax reform, has inflated the yield of Treasury bonds to its highest level since December and restored the faith of investors in the US dollar.

The probability of an increase in the federal funds rate at the March meeting of the FOMC, according to Bloomberg estimates, jumped to 80%, which means that until the 15th the greenback is likely to be strengthened. Under pressure will be the yen and the euro, the currencies, whose central banks-issuers adhere to the ultra-soft monetary policy. Is this hypothesis confirmed by statistics?


The best results for March for the period from 1999 to 2016 became the Swiss franc and the Canadian dollar, while the outsiders included the euro, the yen and the Swedish krone. Taking into account the fact that Rixbank, despite the successes in the economy, continues to use the instruments of monetary expansion, worrying that the EUR / SEK peak will lead to a deterioration in the state of foreign trade, we can say that the pair USD / SEK, as well as EUR / USD and USD / JPY will win back the divergence factor in the monetary policy of the Fed and other central banks. The leadership of "Swissie" looks logical as the parliamentary elections in the Netherlands approach and the presidential elections in France.


Periods of growth / fall



Investors should pay attention to the New Zealand dollar, which stands out from the standpoint of such a measure as the median. "Kiwi" quite confidently felt in March for the previous 17 years, ahead of "luny" and the franc. The exception are 2001 and 2006, when the NZD / USD pair lost about 6% and 8%. The number of outsiders on this indicator again includes the Japanese and European currencies.


Mean values and medians



Attention is drawn to a wide range of changes in quotations for Australian and New Zealand dollars in March 1999-2016. In the pairs associated with these monetary units there are high risks of kickbacks in case of correction by US stock indices and worsening global appetite for risk. The pound in early spring, on the contrary, maintained a propensity for consolidation, which casts doubt on the possibility of a GBP / USD hike below 1.2 in the next 30 days.


Dynamics of changes in quotations during periods of growth / fall



In my opinion, a breakthrough in quotations of futures for Brent resistance at $ 57.3 per barrel will strengthen the chances of continuing the rally and return interest to the currencies of the countries exporting black gold. At the same time, investors' appetite for risk will increase, and the divergence factor in the monetary policy of the Fed, on the one hand, and the ECB and the Bank of Japan, on the other hand, will allow selling EUR / USD and buy USD / JPY, as well as USD / SEK with targets at 1.035-1.039, 115-115.5 and 9.25-9.3. Quite curious are the shorts for EUR / CHF and the long lines for CAD / JPY in the direction of 1.0525 and 87.5-88.