The dollar remains under pressure ahead of the Fed meeting, while it seems that risky assets are getting rid of fears of extension of the bearish pullback. As for the outcome of the meeting, a combination of revised economic forecasts and a promise to keep rates low for longer is likely to cause a rally in risky assets, but then the Fed will have to turn a blind eye to the risks of a stock market bubble.
Signals of strengthening domestic demand in China and industrial production also supported optimism in market sentiment. In annual terms, industrial production in China increased by 0.4%, which, given the pandemic shock, indicates a very high recovery rate.
In China, a rebound on all economic fronts
USDCNY fell below 6.80, in addition, the USD is also declining against other Asian currencies with a cyclical nature, which indicates investor faith in the recovery phase in the new economic cycle. Strong data on industrial production in the US should support market sentiment ahead of the FOMC decision, so sales should naturally dominate in USD.
The Euro and other European currencies were supported by the positive ZEW report, which indicated strengthening of positive expectations of the EU economic recovery. The economic sentiment index significantly exceeded the forecast, which promises positive changes in the index in the coming months. The cyclical euro could also get a bit of a boost from better data and rise above 1.19 against EURUSD.
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