The US economy may soon lose its position as a major driver of the global post-crisis recovery. According to recent studies Financial Times, the probability of the return of recession in the US this year is 20%. In parallel, decreases the likelihood of further rate hikes by the Fed, the cause of which could serve as a frankly weak US statistics, as well as growth in global risk due to a slowdown in economic China's growth.
Beijing already take stock of the past year, has reported on the growth of its economy by 6.9%. Of course, European countries and the USA on these indicators remains only dream of, but for China - a minimum of growth since 1990. Moreover, it seems the Chinese Communist Party in the course of a turn of the economy to domestic consumption grows - in 2015 the volume of foreign trade decreased by 7%, while the share of services in GDP for the first time in the history of the country exceeded 50%.
Another factor for a possible adjustment of the Fed plans to raise the key rate will be largely unexpected decision by the Bank of Japan to reduce its rate to negative levels. It should be noted that the actual actions of the controller can be compared with the introduction of a negative deposit rate in the euro area, and not move to the "minus" the basic rate. However, the willingness of the Japanese and European central banks to further easing policy clearly calls into question the plans for all of last year the Federal Reserve.
At the December press conference, the first in many years, the rate increase, the Fed chief Janet Yellen has estimated the probability of arrival of a new recession in at 10%. It would seem that the labor market is recovering, and the US economy shows good growth. However, in January, the stock market dipped significantly, showing a result of one of the worst results in the beginning of the year, which again increases the risk of a deeper failure indices, and this is where the Fed is faced with a major challenge.
Earlier, the Fed said that for 2016 we are waiting for a rate increase by 1% for four sessions FOMC. However, in fact the US manufacturing sector is already in recession, showing a negative trend. The positive dynamics of the labor market could be soon broken-wave reductions, which began in December, a number of American companies. How in these conditions the Fed is going to go on tightening policy - can only guess.
In the short term possible further movement of the main currency pairs in the direction of strengthening of the dollar. In Eurodollar this line gets an additional driver in the form of weak statistics for the euro area. Last Friday came not the best of data on inflation and on Monday we saw a modest data on industrial PMI. The MSC 19 is scheduled to speak before the European Parliament, Mario Draghi annual report for 2015. If the ECB chief convincingly say about the possibility of the continuation of regulator's soft policy, Eurodollar can get support for further decline.