The Dollar fell despite Charles Evans, noting that the progress of the US economy this year allow for two or four rate increases, but there is no need to rush things. Today, investors will get some food for thought in the FED George comments in Washington and Mester in Richmond.
The Australian currency stalled at the five-month peaks despite the optimistic protocol of the Reserve Bank of Australia on the monetary policy. The regulator pointed to the threats associated with the growth of household debt, which reached 187% of the GDP, while the real estate market continued to gain momentum, suggesting a possible overheating. Only the Q4 official statistics showed that the quarterly growth in the housing prices was 4.1% accompanied by low borrowing rates and shrinking unemployment. Unemployment, however, remains below the target level, which forces the RBA to maintain easing at the current level. Reflation of the national currency in the context of the 3-percent growth of the economy will likely allow AUD/USD to rush into new heights, which does not rule out a move towards the peaks of May 2015, when the pair was trading at 0.78-0.79.
Positive statistics on the unemployment in Britain and the BOE officials discord indicates that a growth catalyst is present, but first, the political background must clear up. Considering this, Pound can be once again carried downstream to a range of 1.22-1.2250, from where the road will then open upward.
As expected, the data on consumer inflation in the UK was in line with expectations, as the recent weakening of the Pound caused an increase in prices for imported goods and gave impetus to exports. It should be noted that with low consumer spending, the devaluation of the currency does not always contribute to the accelerating inflation. The official statistics also show that exit from the European Union has not yet affected the spending of the population.
The pressure created by the leading economies central banks after raising the FED rate rumours, this gave an idea to the policymakers to step back from an intensive easing program. For ECB and the Bank of England, this is very likely (enabling an improvement in the economic situation), while for the Bank of Japan the transition may drag on, as the official inflation data shows that the economy has not yet gained momentum. These rumours fuel the growth of Euro, which potentially has a chance to break through the November highs.
Precious metals price fell sharply on Tuesday, but in general, this remains in line with the upturn as fears of correction on the stock markets grow, raising the demand for defensive assets. Since the FED´s rate hike, the Gold futures have risen roughly by $28, while the Japanese Yen has been steadily growing against the Dollar, creating the impression that the thoughts of a bubble are increasingly worrying the market participants. Further growth of defensive assets creates an attractive opportunity for trading. The short-term target for Gold is $1,250 per ounce, while for the pair USD/JPY the target remains at level 111.75 – support for November 2016, where a breakthrough may apply that the door for the further drop is open.
