The United States of America

USD is weakening against JPY and has ambiguous dynamics against EUR and GBP.

Investors focus on data from the American labor market: in February, employment growth amounted to 275.0K, significantly exceeding the predicted 198.0K. However, the number of jobs in January was revised from 353.0K to 229.0K, the unemployment rate increased from 3.7% to 3.9%, and the dynamics of average wages slowed to 0.1% instead of the expected 0.2% MoM and to 4.3% compared to 4.4% YoY. These statistics may influence the decisions of US Federal Reserve officials on monetary policy: most experts expect a transition to the “dovish” rhetoric at the regulator’s June meeting, and in total, two to four interest rate cuts of 25 basis points each are predicted this year. Tomorrow, investors will pay attention to US inflation data for February: if a further decline in the consumer price index is confirmed, the American dollar will be under pressure.

Eurozone

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

Due to a lack of significant economic releases, currency movements are due to external factors. Today, the head of the National Bank of Slovakia and a member of the board of the European Central Bank (ECB), Peter Kazimir, said that officials saw more and more signs of a decline in inflation but the start of interest rate cuts should be delayed until June. In general, these comments were similar to the statements made by ECB head Christine Lagarde. She noted that the regulator would receive enough new inflation data in June with the release of the Q1 EU wage growth statistics, and the ECB might begin monetary policy correction. According to Reuters sources, most officials are inclined to start reducing borrowing costs in June, but some are proposing to take this step no earlier than July.

The United Kingdom

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

According to February data from the British Recruitment and Employment Confederation (REC), the monthly labor demand index fell from 49.4 points to 46.9 points, the lowest since January 2021. Recruitment agencies are reporting a serious drop in the rate from employers, with it declining for both permanent and temporary workers and their wage growth slowing. These data reflect the prerequisites for a further slowdown in inflation rates in the UK economy and provide Bank of England officials with another argument in favor of starting to lower interest rates.

Japan

JPY is strengthening against EUR, GBP, and USD.

Positive dynamics are developing against the Q4 gross domestic product data: the indicator adjusted by 0.1% instead of the previously expected –0.1% QoQ and by 0.4% compared to the forecast –0.4% YoY. Thus, the country avoided a technical recession, but experts note that the pace of recovery of the national economy is insufficient due to the low level of domestic demand. However, these statistics strengthen investors’ hopes that the Bank of Japan may begin tightening monetary policy in March, which supports the yen against its main competitors.

Australia

AUD is weakening moderately against EUR, GBP, JPY, and USD.

Chinese authorities have announced that they are working to cancel the increased duties (up to 218.0%) on imports of Australian wine products introduced in 2020. Experts expect the tariff issue will be resolved this month, allowing up to 2.0B liters of wine stored in warehouses to reach the Chinese market. On Tuesday, investors await the release of January property market data. According to preliminary estimates, total building permits fell by 1.0%, and the rate of private house sales fell by 9.9%, confirming the pressure of high interest rates from the Reserve Bank of Australia (RBA) on the sector and allowing the officials to move on to changing the monetary policy course.

Oil

The market remains influenced by a number of opposing factors.

Thus, it is under pressure from growing fears of declining oil demand in the Chinese economy: according to the latest data, imports of crude oil into the country in January-February increased compared to the same period in 2023, but less than in the last months of last year, which somewhat alarmed the experts. In addition, the producer price index fell 2.7% in February, reflecting poor demand. On the other hand, a significant weakening of the asset is hampered by the ongoing geopolitical tensions in the Middle East in the absence of progress in peace talks between Israel and the Hamas movement, as well as the February weakening of the American labor market, against the backdrop of which US Fed officials may move to adjust monetary policy in the near future time.