Analysis of the past week

The passed week was full of statements and speeches that influenced the dynamics of the US dollar and the market as a whole. So, the turning point of the week was the speech of the US Federal Reserve Chairman Powell, which was held on Tuesday. The Fed chief was very optimistic in his statements about the growth of the US economy and the possibility of tighter monetary policy, which confirmed market expectations for a fourfold increase in interest rates in the US this year. Powell’s second speech had virtually no impact on the market, as nothing new was said. At the same time on Thursday it became aware of the intention to conduct new Trump duties on imports of steel and aluminum in the United States, which was interpreted by the market as a new stage in the US trade war.

The resumption of trade confrontation for the market looks like a full-scale conflict with all the ensuing consequences. The second day in a row, stock exchanges close in the red, and investors prefer safe haven assets.

So far, the intentions to raise the import tax have not been documented and looks more like probing the soil. But the policy of the Trump administration implied these actions, just remember the lifting of the tax on solar panels.

As a result of these actions the US Dollar Index, after nearly a week of growth, lost most of the positions, returning to a maximum of Monday, thereby casting doubt on the possibility of the development of “double bottom” figure. In addition to the American currency, fears remain in the euro area due to the lack of a ruling coalition in Germany and the parliamentary elections in Italy. In the end, this can only increase concerns about the euro area.

Graph of the US dollar index. The current price is 90.00.

Hanzenko Anton