The United States and Iran are most likely back to talks about peace in the Middle East, reports Bloomberg.
EBC and Fed in waiting mode. “Both central banks are in a different situation,” says the expert
White House spokesperson Karoline Leavitt said that Donald Trump convened a meeting with national security officials to review Tehran’s proposal, which was announced earlier this week by the portal Axios.
Read also: Dollar and euro rates change direction? Axios: “Iran presented the United States with a new proposal”
The U.S. government maintains a hard stance on ending military actions, which, according to Trump, can only end if existing stockpiles of enriched uranium are eliminated and further actions toward developing a nuclear program are abandoned.
“His red lines [Trump’s – przyp.red.] regarding Iran were presented very, very clearly,” Leavitt said, adding that the American leader will “soon” address the matter.
Tehran demands talks to reopen the Strait of Hormuz in exchange for Washington lifting the blockade of Iranian ports.
Iranian authorities also want the nuclear talks, due to a lack of a common stance between the states, to be postponed.
Meanwhile both the Federal Reserve and the European Central Bank are preparing for upcoming meetings.
The FOMC decision will be announced Wednesday, while the EBC, together with the Bank of England, will deliver its decisions Thursday.
Mirosław Budzicki, financial markets strategist at PKO Bank Polski, explained in an interview with FXMAG what messages the market will most likely receive.
Fed and EBC should keep rates unchanged this week.
In light of the ongoing conflict in the Middle East, central banks are trying to assess the scale of the pro‑inflationary impulse of rising energy prices and the negative impact of geopolitics on economic conditions.
“Both central banks are in a different situation,” the expert said.
The Fed has room to loosen monetary policy, but due to the recent rise in inflation it will heavily delay decisions on rate changes. Therefore I expect the comment after the Wednesday meeting to remain neutral and not change market sentiment.
In the case of the EBC, the monetary easing process has ended. Moreover, at the beginning of the year, inflation in the euro zone was near the central bank’s target and the forecasted economic rebound fueled speculation that the next move would be a rate hike.
Mirosław Budzicki also highlighted the importance of the pro‑inflationary impulse from energy commodities that arrived at the turn of Q1 and Q2.
“As a result, the market has almost fully priced in the June EBC deposit rate hike of 25 basis points to 2,25%. I expect the discussion at the Thursday press conference with President Christine Lagarde to focus on this perspective,” he said.
Looking only through the lens of expected changes in monetary policy, one can expect the EUR/USD rate to rise to 1,18.
A more hawkish EBC rhetoric favors a test by the EUR/PLN pair at 4,25, and by USD/PLN at 3,65.
Chart. Dynamics of interest rate changes in the United States and the euro zone
Source: Trading Economics.
Read also: Dollar on a long path to 4 PLN? Expert issued forecasts for USD/PLN and EUR/USD. “The dollar may gain”
See also: Will the dollar surprise again? Expert issued a forecast for USD/PLN and EUR/USD. “It’s hard for me to believe there are no more fires”
Dollar and euro rates on Tuesday, April 28
The dollar to zloty rate on Tuesday, April 28 is at 3,62 PLN.
Chart. Dollar to zloty rate (USD/PLN)
Source: TradingView.
The euro to dollar rate reaches 1,17 USD.
Chart. Euro to dollar rate (EUR/USD)
Source: TradingView.
The euro to zloty rate hovers around 4,24 PLN.
Chart. Euro to zloty rate (EUR/PLN)
Source: TradingView.
Read also: Euro will soon surprise? Expert says what will happen with EUR/PLN and EUR/USD
See also: Dollar before a “nervous and dynamic” move, euro expects a drop? Expert issued a forecast for USD/PLN and EUR/USD
Sources: Bloomberg, Axios.
