The downward trend continues. Despite the fact that the dollar managed to strengthen against major currencies, investors consider the dollar as an unstable and risky asset. The dollar remains under pressure because of fears of the growing budget deficit, which according to the draft budget will increase in 2019 by a trillion dollars. In addition, if monetary policy is tightened at a quick pace, it is likely that investors will prefer less risky assets. Investors no longer consider the Fed's rate hikes as positive as they used to before. However, according to the latest protocols, the Federal Reserve is resolute about further rate hikes. Fed officials evaluated highly the current economic situation and expect further economic growth and a decline in unemployment, which provides an opportunity to tighten the monetary policy.
At the same time, central banks in other countries are also thinking about revising interest rates. It is expected that the difference between the Fed rates and the central banks in other countries can decrease, which is a negative factor for the USD. Therefore, if the Federal Reserve carries out all of the planned rate increases for this year, they may be able to get rid of this factor.
The Central Bank of Sweden, in particular, is no exception among the central banks of other countries that plan to revise rates in the future. At the moment the rate in Sweden is -0.5%, which is the lowest level of all time. At the same time, at the last meeting held a week ago, Riksbank left the rate unchanged, as expected, noting the effectiveness of the current monetary policy and the achievement of the inflation target for 2017. Still, officials mentioned the probability of a slow, gradual increase of the rate, starting from the second half of 2018.
The stochastic oscillator signals the overbought area and confirms the efficiency of short deals, which can be effective in the short and medium term.
