The coming week will be the first business week of the new month and, therefore, the turn of the key macroeconomic data from the US for February will come, which can significantly impact the Dollar’s positions. On Tuesday, March 5, at 15:00 GMT, the Supplies Management Institute will release data on the Managers Orders Index in the services sector and on Friday, March 8, a report on the labor market by the Labor Statistics Bureau will be released. The macroeconomic data of the world’s largest economy has recently been of a positive nature, and the traders will anticipate a continuation of this tendency. It should also be noted here that the stock indices’ strengthening can be accompanied by the simultaneous strengthening of the Dollar. The reverse correlation, established between them over the past years, begins to burst. We suppose the US currency has every chance to continue its growth across the entire market.
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The US Dollar continued strengthening its positions for the period of February 25 – March 1. The outcome of the Italian parliamentary election weakened the Euro’s positions, the specific weight of which in the Dollar index is 45%. In the week’s aftermath, it lost 0.4%. Besides that, the connection between the stock indices and the main global reserve currency, when the shares growth was accompanied by the Dollar’s weakening, begins to burst. The reverse correlation coefficient between the USDX index and the stock index S&P 500 is now at one of the lowest levels over the past years. The main reason of such a gap is a lot more favorable economic situation in the US, where the world’s largest economy’s recovery is flowing a lot more confidently than in Japan and the Eurozone. Therefore, when the positive macroeconomic data from the US moved the shares upwards in the middle of the week, the Dollar also strengthened its pressure on the competitors.
For the period of February 25 – March 1, a number of important reports and events, capable of significantly impacting the US Dollar’s positions, is scheduled. The USFR Head Ben Bernanke on Tuesday, February 26 at 15:00 GMT will present a report on the monetary-credit policy to the Senate Banking Committee. The last protocols of the Open Markets Committee’s meeting have reflected the concerns of some of its members about the growing volume of assets on the USFR balance, accumulating as a result of the quantitative easing program’s implementation. Therefore, the traders view it as a probability of the premature QE3 folding. They will be looking for either disproof or proof of these suppositions.
The US Dollar strengthened its positions over the period of February 18-22 as it became known from the protocols of the last meeting of the USFR Open Markets Committee that a number of its members are concerned about the assets volume growth on the regulator’s balance. The probability of the early folding of the quantitative easing program increased and the Dollar regained strength. The USDX index, being its correlation to the basket of the six main competitors, gained 0.9% in the second half of the day on Friday, February 22 in the week’s aftermath.
The main event of the week of February 18-22, capable of impacting the US Dollar’s positions will be the publication of the protocols of the last USFR meeting. It will take place on Wednesday, February 20 at 19:00 GMT. The Federal Reserve has not made changes to the monetary credit policy and remained generally optimistic about the US economy’s prospects in the first half of 2013. Therefore, we are not anticipating any surprises and massive moves. It should also be noted that Monday, February 18, is a banking holiday in the US and market activity in the second half of the day can be very low. In general, the Dollar, in our opinion, will not hurry with growth, despite the Euro’s weakening. The demand for the risky assets on the global financial markets is preserved.