The U.S. Dollar Index was corrected downward on Monday
London (Apr 1) The U.S. Dollar Index was corrected downward on Monday. The Chicago (PMI) for March was much weaker than expected and amounted to 55.9 points. In addition, the Fed Chairman, Janet Yellen said the U.S. economy still needs support from the Fed. Market participants decided that the soft monetary policy may be continued. This reduces the chances for the next contraction in the QE or the asset purchasing program at the next Fed meeting on April 30 as well as a negative impact on the U.S.Dollar. Note that the U.S. regulator has its step taking associated with the unemployment level and considered the level 6.5% acceptable. Because of this, the U.S. labor market data on Friday may strongly influence the currency market. Today, investors will monitor the ISM Manufacturing for March, which will be released at 16-00 CET. In our opinion, the preliminary forecast (54 points) is a positive for the U.S. currency.
Despite the weakening USD, the rising (EURUSD) was limited yesterday by the negative inflation data for March. It was the lowest since November 2009. Theoretically, this could prompt the ECB cut interest rates to prevent deflation at its next meeting this Thursday. Recall that the consumer price growth of less than 1 % was observed for six consecutive months. Today, at 9-55 CET and 10-00 CET EU we will see the important data on: Unemployment in Germany and the EZ PMI Manufacturing. They can affect the Euro if they differ markedly from neutral predictions.