27.02.201810:07 Forex Analysis & Reviews: Do not expect a rapid increase in rates from the Fed

The absence of important fundamental statistics, as well as, today's speech of Fed chairman, Jerome Powell, forced many major players to refrain from making serious decisions related to risky assets.

According to the Federal Reserve Bank of Chicago, the national activity index was 0.12 in January against 0.14 in December. The main pressure on the index had a decline in sales and inventory. Orders decreased by +0.07 versus +0.09 in December. Growth was demonstrated by employment indicators, up to 0.09 against -0.02 a month earlier.

Production activity of Texas in the month of February has increased.

According to the report of the Federal Reserve Bank of Dallas, the production index grew by 11 points and amounted to 27.9 points against 16.8 points in January. The overall index of business activity in February was 37.2 points against 33.4 points in January, while economists expected the index to be at the level of 32 points.

Pressure on the US dollar in the afternoon rose after the publication of data in sales of new homes in the U.S. fell sharply. According to the report of the US Department of Commerce, sales of new homes fell by 7.8% to 593,000 homes per year in January this year. Economists expected a 4.0% increase in sales in January.

The statement by the representatives of the Federal Reserve once again points to the fact that the timing of an earlier increase in interest rates in the United States is shifting.

For example, the head of the Federal Reserve Bank of St. Louis, James Bullard, said yesterday that the interest rates of the Fed are in the recommended range and may remain low for the foreseeable future. In his view, low productivity, increased labor and high demand for safe-haven assets limit the natural level of interest rates.

As for the tax reform, the reduction of taxes will lead to a stronger productivity growth, according to the representative of the Federal Reserve. Bullard, similar to his colleagues, talked about the option of revising the target inflation rate, saying that the Fed will decide on this revision in the near future.

ECB President Mario Draghi's speech, which took place in the afternoon, slightly inspired the buyers of risky assets. According to Draghi, the economy is moderately growing and will continue to show strong growth in the future. However, despite this, inflation does not yet show signs of a steady upward correction, and therefore, uncertainty continues to prevail.

As for the changes in monetary policy, patience and perseverance are still needed, as stated by the head of the ECB.

Such statements are unlikely to give strength to the European currency in the near future.