The Euro at new lows, the dollar has shifted to the fed

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On Wednesday, the interest to purchase higher-yielding assets was replaced by a flight from risk, which resulted in the widespread decline of the stock markets of the world. After Asia, Europe has opened to a decent minus, where the leader of falling became the Italian MIB losing 0.7 percent after yesterday’s rise. The mood of the international investors ruined trump statements that expressed dissatisfaction with the progress of negotiations with Beijing, and also questioned the fact that the June summit with the leader of the DPRK will be held.
On the wave of an external negative the Russian indices started on a negative territory, with the RTS immediately sank by more than 1%, reflecting the opening of trading the ruble with a bearish gap. The pair dollar/ruble jumped to levels near 61,50 RUB where began a pullback towards the level of 61 RUB, but the movement looks unstable.
The ruble is vulnerable in the face of declining attractiveness of risky assets and a slight bearish correction in the oil market, while in support of the currency acts as a tax period. Given the return of interest in buying the dollar on the international market, the probability of returning a pair under the mark 61 RUB in the short term is small.
The European currency is again under pressure after a recent recovery attempts. The Euro is again approaching key support 1.17, updating the lows 2018 after the release of the next portion of the depressing economic statistics. May preliminary indicators of business activity in Germany was disappointing on all fronts, confirming further the slowdown in the largest economy of the Eurozone in the second quarter.
The highlight of the day will be the publication of the FOMC minutes. There are hidden risks for the dollar. Last month the currency of well gained weight, and one of the main drivers of growth is the renewed expectations of more active normalization of fed policy this year amid accelerating inflation. To maintain the tone of the USD is necessary to hawkish signals from the controller, which can refrain from clear promises and be limited to positive comments regarding inflation.
Sergey Kostenko,
Investment analyst