The Fed is not going to raise the rate, but may reduce the volume of asset purchases - 20.5.2021

On Wednesday, the US dollar index rose after a 4-day decline. Now it is trading just above the 90-point mark again. Yesterday's FOMC Minutes for April considered the possibility of reducing the money supply for the purchase of bonds. Investors saw this as a chance for tightening the Fed's monetary policy, which supported the US dollar. It is possible that the American regulator will announce a decrease in the volume of bond buybacks at the next meeting on June 16, 2021. Its likelihood will increase if strong economic indicators are published in the United States before that. This morning, Japan released unexpectedly strong data on foreign trade for April, and Australia - on the labor market. The real figures were much higher than the forecasts. This could support the Japanese and Australian currencies.

On Wednesday, the US stock indices dropped slightly. The FOMC Minutes confirmed that the Fed is discussing tightening monetary policy by reducing the volume of buybacks (quantitative easing program). However, there is no mention of raising the Fed rate (+ 0.25%). Nevertheless, the yield on the United States 10-Year Treasuries Bond rose yesterday from 1.64% to 1.68% per annum, while shares fell in price. European stock indices won back some of their losses yesterday thanks to a decrease in core inflation in the EU to 0.7% in April. Normal inflation stood at 1.6%, which is still below the ECB's target of 2%. The same data supported the euro rate. Today the US will release data on the number of unemployed for the week and two economic indicators - CB Leading and Philadelphia Fed Manufacturing. Usually these indicators are not particularly important, but currently they have negative forecasts. The US stock index futures are currently trading slightly lower.

World oil prices continued to decline yesterday for the second day in a row. In addition to negotiations between the United States and Iran on the "2015 nuclear deal", this was facilitated by the continuation of the coronavirus epidemic in Asia and the tightening of quarantine in a number of countries. According to Johns Hopkins University, the number of Covid-19 patients in India has exceeded 25 million. According to the U.S. Energy Information Administration (EIA), US oil reserves increased by 1.32 million barrels over the week. This is slightly less than forecasts (+1.6 million). Market participants believe that if the US-Iranian talks are successful, Iran could increase oil exports immediately after the June 18 presidential elections. Yesterday, soy and wheat quotes fell noticeably. Investors are hoping for rainy weather in some American states and Brazil, previously hit by drought. Rainfalls may increase yields.