Yesterday, the market literally exploded when, in the evening, investors were wildly interested in selling dollars. The reason, of course, was the outcome of the meeting of the Federal Commission on Open Market Operations. The fun began immediately, as the Federal Reserve System issued a press release, which, although it was said that the regulator decided to leave the monetary policy parameters unchanged, one board member voted to lower the refinancing rate. Moreover, this document itself says that although the labor market continues to be in very good condition, the risks of a slowdown in inflation has increased. This clearly indicates that there will be no increase in rates and the Federal Reserve continues to prepare the public to change course and monetary easing. During the subsequent press conference, Jerome Powell added fuel to the fire, saying that almost half of the Federal Reserve Board members do not rule out the possibility of reducing the refinancing rate to 2.0% by the end of this year. Such thoughts are both due to weak inflationary dynamics and obvious signs of a slowdown in the economy in the near future. Part of this is due to the increasing risks that are exacerbated by the escalation of trade disputes around the world. In other words, the Federal Reserve once again hinted a quick change in its course including obvious signs of a slowdown in the economy in the near future.
After such a brisk jump, a rebound is worth noting, and a triple damn Brexit, or rather, another series about the election of a new head of the Conservative Party and the Prime Minister of Great Britain might be the occasion. In the third round, Boris Johnson was able to strengthen his leadership, gaining 143 votes already. In addition to him, the next tour was Foreign Minister Jeremy Hunt, Environment Minister Michael Gove and Interior Minister Sajid Javid. International Development Minister Rory Stewart dropped out of the race because he scored the least number of votes. Two more rounds of voting have been scheduled for today. During each of which, the one who got the least votes will be eliminated from the game. As a result, only two candidates must remain, one of whom will be chosen by the entire Conservative Party. But everyday, it gets more obvious that Boris Johnson will become the future Prime Minister of the United Kingdom, which means Brexit is uncontrolled with unpredictable consequences for both the UK and the European Union. Moreover, the unpredictable consequences imply a choice between "worse" and "just awful."
To confirm these fears, the macroeconomic statistics of Foggy Albion makes them grab their hearts. Yesterday's inflation slowed down from 2.1% to 2.0%, while today's retail sales data should show a slowdown in their growth rates from 5.2% to 2.7 % Such an explosive mixture of slowing inflation and lower sales volumes for many investors is like an incense for the devil.
The euro / dollar currency pair, having felt a support in the area of the accumulation level of 1.1180, slowed down. After which, due to the information background, a surge began, drawing a pulse up to the level of 1.1285. It is likely to assume that due to local overheating, the ardor of bulls will gradually subside and we will see a logical pullback.
The pound / dollar currency pair demonstrated a more intensive movement, with a move of more than 200 points in total from the fulcrum point 1,2500. It is likely to assume that relative to current values, we can see a temporary stagnation with subsequent rollback.
