March 14, 2022
EUR/USD: The euro continues its downward trend. February inflation data for Germany were released on Friday. The consumer price index rose from 0.4% to 0.9% month-over-month and from 4.9% to 5.1% year-over-year. The pressure of high inflation on the German economy continues to grow, which could lead to a slowdown in economic growth in the country. According to calculations of the Institute for Labor Market Research (IAB), German GDP growth this year could shrink by 2.0%, and inflation could rise to 7.0%, caused by the sanctions war around the Ukrainian crisis. Amid a sharp rise in prices, the European Central Bank (ECB) said it would continue to tighten its monetary policy. The day before, officials announced the end of the asset purchase program (APP) in the third quarter of this year, which leaves the possibility of the first interest rate increase by the European regulator at the end of this year.
USD/JPY: The yen is under pressure due to weak data on the business conditions index for major Japanese manufacturers. The index declined from 7.9 to -7.6 points in the first quarter instead of rising to 8.2 points. The deterioration resulted from the ongoing, though declining, coronavirus epidemic and a serious rise in fuel prices related to the current Ukrainian crisis. Japanese household spending data for January came out Friday, rising 6.9%, above the expected 3.6%. It’s worth noting that spending may continue to rise due to higher inflation. However, according to Finance Minister Shunichi Suzuki, the Japanese government is not yet considering introducing new measures to support consumers.
Brent: Oil quotes are making modest attempts to grow. Brent is under the influence of opposite trends. They are supported by growth in demand due to the global economy coming out of the coronavirus epidemic and disruptions in supplies to the Russian raw materials market. On the other hand, investors are watching how negotiations over the US-Iran nuclear deal will end and whether some OPEC members will agree to increase production to prevent prices from rising further. On Friday, Baker Hughes published data on the number of rigs in the U.S.: the indicator has been growing for more than a year, but a special growth in production capacity should be expected in the near future due to rising prices and significant demand in the oil market. In the current environment, the increase in the number of active drilling platforms will mean the possibility of partial replacement of the deficit by the U.S. shale oil.