23 January, 2014
On Wednesday the US dollar increased vs. the Canadian dollar and the yen amid finished meetings of the Bank of Canada and Japan – but decreased vs. the pound and the Australian dollar. The pound rocketed after positive Labour Market report release, and approached to the highs of the beginning of the year. The Australian dollar strengthened its position after the Inflation Report release in Australia for the 4th quarter which has exceeded the expectations.
The dollar increased inconsiderable vs. the rest major currencies, having strengthened its position by 0.1% according to the dollar index. For the second day in a row there were no significant macrostatistic data in the USA on Wednesday. Therefore a lot of statistic data is expected to be released on Thursday – Unemployment Rate, Existing Home Sales, Chicago Fed National Activity Index, and FHFA House Price Index.
The pound rocketed after positive Labour Market Report release, having approached to 3-weeks highs of the beginning of the year. ILO Unemployment Rate dropped in September-November by 0.3% to 7.1% - the lowest rate for almost 5 years since February 2009. Decrease to only 7.3% was expected. Claimant Count Change in December decreased a little less than it was expected - to 24 000 instead of 32 000.
Unemployment Rate approached to target rate of the Bank of England, after that it may consider the matter of interest rate increase. The decrease of Unemployment Rate to 7% was expected not earlier than in the second half of 2015. Nonetheless in the last released minutes of the BOE it was stated that there is no necessity to increase interest rates even if the Unemployment Rate reaches 7% in the nearest future.
The yen weakened amid 2-days meeting of the BOJ, during which the course of the monetary policy was saved at the same level as it was expected. BOJ left economy estimation unchanged for the 5th month in a row. BOJ Governor Kuroda announced that current monetary policy will be the same if there are no upward or downward risks for the economy. Fewer experts suppose the Central Bank will agree to QE in 2014 as the inflation gathers pace.
The Australian dollar strengthened its position after release of the Australian Inflation Rate which exceeded the expectations. Consumer Price Index increased in the 4th quarter by 0.8% having twice exceeded the growth expectations by 0.4%. In an annual rate inflation increased by 2.7% against the forecast of +2.4%, which appeared to be the highest for the last 2 years. The data lower the possibility of further decrease of the rate by the Reserve Bank of Australia. Meanwhile Westpac Consumer Confidence decreased in January for the second month in a row – the index dropped by 1.7% to 103.3 p. – the lowest for the last six months.
The Canadian dollar sharply fell after the BOC Rate Statement during which the interest rate was left at the same level, but the final announcement in which the Central Bank highlighted the downwards inflation risks was considered as a milder one. At the press-conference the BOC Governor Poloz announced the Canadian dollar is still a problem for exporters, and weakness of the Canadian dollar is advantageous for the economy. In the quarterly BOC Monetary Policy Report the Canadian currency was mentioned to stay strong, and this fact complicates non- recourse Canadian export.
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