US Dollar Stabilizes, European Majors Weaken Ahead of Fed Announcement
Australian dollar remains the strongest major currency. The US dollar stabilizes slightly in anticipation of the FOMC rate statement. Meanwhile, euro and British pound start to weaken mildly. Euro is weighed down by European Commission’s new forecasts. The pound starts to lose steam as there is no positive Brexit news to give it another lift.
The global stocks were mixed today. FTSE added 0.39%, DAX fell 0.16% and CAC dropped 0.12%. Major Asian indices closed higher except China. Nikkei gained 1.82%, Hong Kong HSI rose 0.31% and Singapore Strait Times added 0.91%. But China Shanghai SSE dropped 0.22%.
The European Commission projected lower economic growth for the Eurozone. GDP in the Eurozone is seen falling to 2.1% this year, after hitting a 10-year peak at the end of 2017. Economic growth is expected to slow down to 1.9% and 1.7% in 2019 and 2020, respectively. Meanwhile, HICP inflation forecast for both 2018 and 2019 are raised by 0.1% to 1.8%. However, HICP inflation is projected to slow down to 1.6% in 2020.
The European Commission also projected Italy’s deficit to hit 2.9% of GDP in 2019. Even worse, Italy’s deficit is projected to hit 3.1% in 2020, breaking EU’s 3% limit. This is much higher than Italy’s own target of 2.4% in 2019. Italian Economy Minister Giovanni Tria said “the European Commission’s forecasts for the Italian deficit are in sharp contrast to those of the Italian government and derive from an inaccurate and incomplete analysis.” Though, Tria also said that the projections would not affect the “continuation of constructive dialogue” with the Commission. And, the coalition government is committed to the 2.4% deficit target.
The results of a two-day meeting of the US Federal Reserve will be announced today. It is widely expected, that the regulator will keep the interest rate in the range of 2%-2.25%.