The US dollar is gradually strengthening against the background of data on inflation in the Eurozone, as well as before the publication of the minutes from the last meeting of the Federal Reserve System.
What to look for in the Fed protocols
Previously, the focus of the protocols will be on the dynamics of interest rates and in particular, how often rates will be raised next year. Also, small importance will be given to the level of neutral interest rates, of which, as we may know, there are a number of disagreements between representatives of the Fed.
I recall that during the September meeting, the Fed voted to raise the key interest rate to a range of 2% -2.25%. This was the third increase this year. A total of four increases are expected with the last one scheduled for December of this year.
An important point is played by the criticism of US President Donald Trump against the Federal Reserve System, which I described in more detail in my morning review.
An important point is played by the criticism of US President Donald Trump against the Federal Reserve System, which I described in more detail in my morning review.
The dynamics of interest rates will also depend on the inflation data. The minutes will cover this moment. Despite the fact that inflation is near the target level of 2% set by the Fed, the growth of the labor market with a good economic recovery in the 3rd quarter of this year, as well as a gradual increase in price pressure on the energy market, can create certain risks. This will lead to the movement to go beyond the target range. Such an alignment of things in the future will force the Fed to raise interest rates more aggressively.
With regard to fundamental statistics, the data for the euro area did not cause a strengthening of the European currency in the first half of the day, which led to another sale in the trading instrument.
According to the data, the CPI eurozone in September of this year increased by 0.5% compared with August, while inflation increased by 2.1% compared with the same period of 2017. Economists also expected prices to rise by 0.5% and 2.1%, respectively. As before, the main growth was observed due to the increase in prices for energy carriers and tobacco products.
Meanwhile, the core CPI index of the eurozone grew by 0.4% in September of this year compared with the August data of 0.9% compared in the same period of growth last year. Eurozone consumer price index excluding tobacco products increased by 0.5%.
Data on the reduction of new homes booked in the United States in September of this year reflect the real picture of the real estate market, which is worsening due to an increase in the cost of borrowing.
The construction of single-family homes and apartment buildings fell compared with August, which also led to a decrease in new bookmarks.
According to a report by the US Department of Commerce, the construction of new homes decreased by 5.3% to 1,201 million September 2017. Building permits also decreased by 0.6% in September compared with the previous month, amounting to 1,241 million.
Economists had expected new home bookmarks to fall by 4.8% in September, while permits would grow by 3.3%.
Great Britain
The level of annual inflation in the UK fell, which pulled down the British pound.
The fall in inflationary pressure will weaken the Bank of England's concentration on further tightening of monetary policy and lead to a more gradual increase in interest rates, thereby creating a cushion for a softer Brexit.
According to the report of the National Bureau of Statistics, consumer prices in September of this year grew by only 2.4% compared with September 2017, whereas in August the increase was 2.7%. As noted in the bureau, the main decline is directly related to the decline in food prices.
The consumer price index rose by only 0.1% in September compared with August data.
