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Investment giants JPMorgan Chase & Co. and Deutsche Bank AG expect the European Central Bank to cut interest rates at the scheduled policy meeting this week. Analysts are questioning whether or not policy changes help domestic economies in the first place, which ignited the bearish trend expected to continue throughout today’s session. Furthermore, the Eurozone’s recent employment change stood still for the fourth quarter of 2019, disappointing investors despite meeting expectations. Meanwhile, the Czech Republic saw positive figures on Monday with an unemployment rate down by 0.1% on February and a trade balance NRA up 8.35 billion on January. FX Reserves for the Czech koruna also went up last month by an astounding 69 million, to push the currency up against its opposite. ECB President Christine Lagarde’s decision on Thursday will determine the majority of the exchange’s movements.
The greenback saw gains in today’s session after US President Donald Trump met with Republican members of the House and Senate to discuss possible payroll tax cuts and help for hourly workers. The White House is also working with the Small Business Administration and the country’s travel industry to help them increase demand amid economic hardship. However, USD will still fall slightly today: markets expect the country’s February PPI to fall by 0.4% in comparison to the previous month, which increases the likeliness of the second interest rate cut in March from the Federal Reserve. Interest-rates futures traders are also pricing in the country’s interest rate hitting below zero by April. Markets also expect much higher US Crude Oil inventories for this month amid lower demand from spreading fears of the financial effects of the coronavirus.
Although the Danish krone remains stagnant this month, prompting low volumes for the currency, emerging data from the United States will push the bigger currency down against the Danish counterpart. Quarter-over-quarter GDP for Denmark saw a 0.2% decline in comparison to 0.4% achieved in the previous quarter, disappointing forecasts of 0.3%. US data showed more declining results with lower expectations on PPI, raising the probability of an interest rate cut from the Federal Reserve for the second time this month. Furthermore, markets expect the rate to reach below zero by April. US crude oil inventories are also expected to surge for March amid lower demand for riskier investments due to the coronavirus crisis. The small spike achieved today was from US President Donald Trump’s promise to lower taxes for US employees in addition to the government’s partnership with the travel industry to help their declining economy.
The Norwegian krone saw negative figures for March. However, support for the European currency will continue to increase even as the country’s coronavirus proliferates, in contrast to panic surging in several sectors of the United States’ businesses. Norway saw PPI declining to 7.4% on February, which was a huge low in comparison to the previous -3.9% achieved on the same month the year prior. Meanwhile, CPI on February in a monthly comparison also saw a decline, down 0.1% against January. Then, core inflation went up to 0.5% for February in comparison to 0.4% achieved in January. Despite all the disappointing figures, the USD will still slump against NOK over concerns that the Federal Reserve will hold a second interest rate cut following the emergency cut last week. Analysts and US futures investors are pricing on interest rates in the US to reach below zero by the time April rolls around.
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