US Fed to decide fate of dollar and ruble

US Fed to decide fate of dollar and ruble

Analysts give different predictions on results of the two-day session of the U.S. Federal Reserve System. The Fed is not expected to increase discount rate at tomorrow's disclosures, but it can give information about reducing its balance worth $4.5 trillion.

If the Fed discloses date of reducing its balance, then the sharp increase in the US dollar rate may occur. Thus, in recent months, the US-dollar has significantly reduced against major contenders, the euro and the pound sterling. Investors may use any minor explanation in favor of a tightening of US-dollar. In this case the USD/EUR rate may drop to 1.15 and USD/GBP to 1.30.

Otherwise, if Fed says that it wants to see sustained improvement in indicators such as economic growth, inflation, wages, unemployment and not addresses the problem of reducing balance then euro against US-dollar may now rise to 1.23 USD/EUR.

Analytical Group of Report believe that the Fed would give comments on strengthening of the US-dollar. In the 12-month perspective, US-dollar against euro is expected to remain at average of 1.15 USD/EUR for inflation to stabilize at over 2%. Acceleration of inflation will lead to a faster increase in the Fed rate from the second half of 2018 and to a significant reduction in balance. In this case, US-dollar's rate will start new upward trend compared to euro, and the rate will fall below the parity.

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