The dollar will rise if the fed hints at tightening monetary policy

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Russian market will open with growth due to the growth of Asian stock indices and decline in the yields of us government bonds to 2.86%. The last factor to ensure the inflow of liquidity in emerging markets. However, the main growth driver for the Russian market will be the transition of Russia’s sovereign rating by S&P scale from the first stage speculative “BB+” in the last level of investment grade “BBB-“. While Fitch confirmed the investment grade rating.
From the press release shows that the economic growth will be weak due to a significant share of the state in the economy, unfavorable demographics and low productivity plus the sanctions will continue to limit economic growth, etc., however, the market will receive an influx of capital that will reduce the entire yield curve of Federal loan bonds, short and medium periods which has already been below 7%, so the ruble will be in demand.
One of the important events this week will be a speech by the new head of the fed Jerome Powell on Tuesday. Investors are waiting for clarification of the position of the head to tighten monetary policy, namely the rate of increase in interest rates. We believe that any hint of a slackening of momentum would cause a decline in the dollar index. A hint of acceleration will cause the growth of the dollar against foreign currencies, and government bond yield will rise to 3%. At the end of week 4 of March in Italy will hold parliamentary elections that may be a risk factor for the Euro, so the strengthening of European currencies may not follow.
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Viktor Veselov,
Chief analyst,
GLOBEXBANK