__cfduid
Valid: 29 days
It helps us protect the website from threats such as hacker attacks. Used by Cloudflare to recognise trusted network traffic.
__lc_cid
Valid: 3 years
Necessary for proper functioning of the chat available on the website.
__lc_cst
Valid: 3 years
Necessary for proper functioning of the chat available on the website.
rc::a
Valid: It does not expire
Cookies to correctly distinguish between human and bot-generated traffic.
rc::b
Valid: 1 session
Cookies to correctly distinguish between human and bot-generated traffic.
rc::c
Valid: 1 session
Cookies to correctly distinguish between human and bot-generated traffic.
NID
Valid: 6 months
Records a unique number to recognise the device you are using. It is used for advertising.
_ga
Valid: 2 years
Registers a unique user number to collect statistical data about how you use our website.
_gat
Valid: 1 day
Used by Google Analytics to reduce queries. Reduces the amount of statistical data collected.
_gid
Valid: 1 day
Registers a unique user number to collect statistical data about how you use our website.
yt-player-bandwidth
Valid: It does not expire
Determines the best video quality based on your device and the Internet connection used.
yt-player-headers-readable
Valid: It does not expire
Determines the best video quality based on your device and the Internet connection used.
A cautious Fed did not support the market sentiment. The dollar gained against the euro after dovish comments from the ECB. The zloty dropped as the risk aversion strengthened.
On Thursday risk aversion prevailed in the markets. All major stock markets dropped. Also, the emerging market currencies posted significant losses. The key factors driving the markets were comments from the major central banks.
Yesterday the Federal Open Market Committee minutes were released. In the March meeting the FOMC left rates unchanged and cut the forecast for hikes in 2016. The newest projection suggests only two increases in this year against four suggested in December. The Fed cited markets instability and weakness of the global economy.
The minutes were rather dovish. The publication cited uncertainty regarding the recently observed inflation rebound. The Committee deliberated on limited tolls to address an economic slowdown given the current level of interest rates near zero. However, there were a few hawkish remarks. Firstly, tow members voted for interest rate hikes. Moreover, some FOMC members said the April meeting would be appropriate to lift rates if the economic reports are positive.
The market reaction to the minutes release was mixed. The situation could have been caused by the discrepancy between the Fed's comments and the market situation. The futures market sees only one hike in December. But the Fed is saying about two increases, which was confirmed by the minutes. Given the situation, the release may be considered hawkish.
The EUR/USD dropped
The second part of the session resulted in a severe decline of the EUR/USD as the market sentiment deteriorated. As a result, the long standing dependency between the EUR/USD and broad market sentiment was violated.
The weakness of the euro was sparked by the comments from ECB Vice-president Vitor Constancio. He reiterated the monetary authorities will do whatever it takes to bring inflation to the target. Earlier ECB Chief Economist Peter Praet made a similar statement. And finally, ECB President Mario Draghi wrote in the annual report that the central bank is determined to fulfill its goal.
The developments in the EUR/USD market reflected the fact investors could have considered the minutes as rather hawkish. On the other side the euro dropped due to dovish comments from the ECB. However, the loose stance of the ECB did not support the broad market sentiment.
Zloty pressured
On Thursday the zloty posted significant losses. The Polish currency dropped against all its major pairs. Similarly, other emerging market currencies were down as the Fed is pursuing its plan to tighten.
Yesterday's press conference of the MPC confirmed the notion that the Polish central bank is relatively hawkish, but this factor did not support the zloty. Nevertheless, in the longer term a hawkish MPC may support the zloty.
Subscribe to our currency newsletter
See also:
Daily analysis 07.04.2016
Afternoon analysis 06.04.2016
Daily analysis 06.04.2016
Afternoon analysis 05.04.2016
Attractive exchange rates of 28 currencies
Live rates.
Update: 30s
Open your free account today
Save your time and money. Create an account for free and discover how much you can gain. Join us today, and start using attractive currency services.
Create free account