A new obsession

18 October, 2016

Yesterday seemed to be all about central bankers turning a blind eye to inflation which has yet to fully arrive as a means by which perhaps easier policy can be sustained for longer. Japan was the first to do it last month, with their latest policy ruses containing a ‘inflation overshooting commitment’, which had barely any impact on markets in Japan because investors have become immune to pledges from the BoJ to restore sustained inflation. So this belief that central bankers can engineer above target inflation, in part because of the underperformance of previous years, has to be credible. For Japan, it isn’t. The Eurozone would probably be laughed off stage at this point for making such a pledge. As for the US, today’s data is likely to show the headline rate rising from 1.2% to 1.5% on a YoY basis, which is a decent leap. But if the price rises are largely coming in food and energy, then it’s not the best kind of inflation for consumers, especially those on lower incomes who spend a greater proportion on such items.

For currencies, it depend on whether such beliefs are going to materially affect monetary policy. For Japan, we know they’ve thrown pretty much everything at it with little effect, so it can be largely dismissed. In Europe, there is a growing expectation that the ECB will deliver further stimulus measures in December. In the UK, the fall in the pound is set to push headline inflation higher, so this could push out the next easing from the BoE, which on the face of their view of the economy is still on the agenda. For the US, is matters more for what the Fed believes will be delivered next year. Recall that the Fed had nearly 4 rate hikes projected for 2016 back at the end of last year. In practise, only one is likely to be seen. Overall, this latest rhetoric has sown some seeds of doubt over a December rate increase from the Fed, hence the pull back in the dollar. Overnight, we’ve see the kiwi push back to the .72 level on the back of better than expected inflation data. The focus is on UK inflation data today at 08:30 GMT, with US numbers thereafter.


Source link  
Oil hits 3-month lows

On Monday, the dynamics of oil was in the spotlight on a combination of negative factors by both the potential demand and the supply part. Asian markets...

Fed Monetary Policy Report to be released

This report is release twice a year and provides an insight into the conduct of monetary policy and economic developments and prospects for the future for the...

The Pound continues to weaken

Cable (GBPUSD) took a hit yesterday as Boris Johnson resigned from the Cabinet following the earlier decision by David Davis to part ways...


The latest Brexit proposals

The UK's Brexit Secretary David Davis has resigned along with two junior ministers, Steve Baker and Suella Braverman, over PM May's latest softer Brexit proposals...

Some ECB members want earlier rate hike

The markets remain subdued after yesterday's 4th of July celebrations in the US. Despite this Oil headlines are dominating the markets once again. US President Trump...

Gold has played out as a double top

The gold chart has played out as a double top with a break under 1300.00 signalling a move down to 1240.00 from its highs at 1365.00. We have now hit the 1240.00...


Gold chart has played out as a double top

The gold chart has played out as a double top with a break under 1300.00 signalling a move down to 1240.00 from its highs at 1365.00. We have now reached...

President Xi warns of Full Scale Trade War

Risk on sentiment returned briefly yesterday as markets retraced some of Monday’s selloff but sentiment in Asia has declined overnight. The PBOC cut...

USD extend losses in risk adverse markets

Stock markets fell hard yesterday as trade tensions deepened and the consequences of such action has investors worried. US Company Harley Davidson...


In the past 24 hours Bitcoin has lost -1.1% and reached $7342.97. Open your trading account with the best cryptocurrency brokers on special terms today.

In the past 7 days the EUR/USD pair has lost -0.2329% and is now at $1.1646. Start trading and making money on Forex today.

In the past 7 days Ethereum has gained 9.4% and is now at $478.457. Have the most popular cryptocurrencies compared online 24/7.


Top Brokers offering Daily Forex Market Reviews


Forex Currencies Forecasts


Top 10 Forex Brokers 2018

# Broker Review
1easyMarketseasyMarkets90%
2FXTMFXTM88%
3HYCMHYCM86%
4FIBO GroupFIBO Group79%
5FxProFxPro78%
6FXCMFXCM73%
7AvaTradeAvaTrade69%
8HotForexHotForex68%
9XMXM68%
10Alfa-ForexAlfa-Forex66%
  


Share: