Forex analytics. The euro got into someone else’s skin – ForexNews.PRO
A bad example is contagious. Following Donald Trump telling the Fed what to do, European leaders began attacking the central bank. Emmanuel Macron said that the ECB should start thinking differently and adjust monetary policy. Inflation cannot be the only goal, we need to pay attention to economic growth and employment. Coupled with the dovish rhetoric of the Governing Council members, this cooled the ardor of the EURUSD bulls and forced the euro to take a step back. For how long?
It is foolish to say that we are in a comfortable position in an uncomfortable world. Uncertainty has eased, but remains high. So a reduction in the deposit rate cannot be ruled out. Despite the fact that the markets are confident of the end of the cycle of monetary expansion. Only one thing can be fixed – the ECB’s 2% inflation target, everything else can change. This opinion was expressed by the head of the Bank of France, Francois Villaroy de Galo. He and Emmanuel Macron seemed to conspire in criticizing the European Central Bank. Is everything really bad in Paris, and the country needs incentives?
There may be problems with politics, but the economy is fine. France made a significant contribution to European GDP, which expanded by 0.3% in the third quarter. Faster than the preliminary estimate.
According to US Treasury Secretary Scott Bessent, the US economy will grow by 3% in 2025. Curiously, its main driving force is the dissatisfied consumer. Despite a slight increase at the end of the year, the consumer sentiment index is at the bottom, but Americans continue to spend money. They are concerned about the cooling of the labor market, tariffs and inflation.
At the same time, the bond market does not buy Donald Trump’s idea that lowering the federal funds rate should lead to a drop in treasury yields. Debt rates are rising, which happened earlier only in the 1998 monetary expansion cycle.
Either investors are confident that there is no recession, or they are worried about the national debt. But the fact remains that something strange is happening to the American economy. Most likely, Donald Trump’s restructuring of the international trading system and pressure on the Fed are to blame for this. Does France really need to use the bad example of the United States?
In my opinion, investors treat the U.S. economy like ordinary Americans. They are dissatisfied with her condition, but they continue to spend. At the same time, the fate of the greenback depends on what stops first. Is it the injection of money by non-residents into securities, or is it the cooling of GDP?
