The USD “lifted in spirits”. Overview for 20.10.2017

The main currency pair is trading downwards on Friday morning; the USA passed the 2018 budget yesterday.

After rising for a couple of days, the EUR/USD pair changed its direction. The current quote for the instrument is 1.1810 (-0.3%).

Yesterday, the USA passed the budget for the next year. It will be more than 4 trillion USD. The document says that the Pentagon expenses, including the nuclear emergency plan and the antiterrorist protection, will increase, while the health care system expenses will be cut. After all, Obamacare program fell. The health system expenses decrease is necessary to promote the taxation system reform, which is one of the most important ideas of Trump’s campaign. The USD investors thought this was a great piece of news for the national currency.  

The main event of this evening will be the speech by the Chairwoman of the US Federal Reserve, Janet Yellen. The speech will start pretty late, at 11:30 PM GMT, so investors will probably respond to it the next week. Yellen is expected to speak about the Fed monetary policy after the crisis. Most likely, she will talk about the tools that the Federal Reserve used and are using both during the crisis and after it, and the way investors respond to them. However, she is quite unlikely to speak about new possible tools. If we are lucky, Yellen will tell something about the inflation and its targets along with the correlation between the economic growth and the CPI expansion growth.

However, this time the inflation may be the key topic for the currency market. In the past, the Federal Reserve estimated the inflation quite low and it hurt the USD rate a lot. If the comments relating to the CPI are confident, the USD will have a chance to rise.  

RoboForex Analytical Department