Abe's stimulus package disappoints investors

3 August, 2016

Finally, the long-awaited news about the Japanese stimulus boost is out. The Japanese Yen soared to three-week high against the US Dollar as Abe’s government released details on the new stimulus package to spur the growth of the declining economy.

The package includes 13.5 trillion Yen of financial measures, whereas a number of direct expenses averages around 7.5 trillion Yen with the main part of it has been scheduled for the course of next two years.

The market analysts say that the total amount of incentives averages at 28.1 trillion Yen including the private budget partnerships and other costs which don’t constitute direct government spending – and therefore will fail to provide an immediate boost to the economy.

The Dollar fell to 101.53 against the yen, which is the currencies lowest level since July 11th. The US currency remains under pressure after the streak of lackluster economic data, especially about the weak GDP, which considerably reduced chances that the Federal Reserve will raise interest rates shortly.

The probability of a rate hike in September fell to 18% from the previous 22% of last week, while the chances for a rate hike in December are estimated at 43%. It seems like the previous confidence is gone as the rate lost 10% from last week.

The Dollar futures which track the greenback against a trade-weighted basket of six major currencies fell by 0.35% to 95.41. In turn stepping back to a five-week low at 95.34 points.

The Reserve Bank of Australia cut the cash rate by 25 b.p. to 1.5%, matching the analyst’s estimate. Aussies were not happy about the Bank’s decision but quickly recovered as they received gains of the commodity market.

The Pound advanced on an upbeat construction by the PMI report which slowed its decline to 45.9 points in July, beating the forecast that predicted the drop to 43.8 points. The GBP/USD rose to 1.3250, paring down gains later in the London session. Nevertheless, the construction sector in the UK fell to it’s the lowest since June 2009, with commercial activity displaying the worst performance in the entire country.

The European indices fell by 0.84% on the pound gains while the European Stoxx 50 lost 1.59% with the decline of commodity producers fuel, the French CAC 40 tumbled 1.61%.


Source link  
Pound is taking unexpected turns

The British Pound rose sharply on Tuesday as political uncertainty in France and geopolitical risks...

France may seal the fate of the EU

This week the market sentiments will be orchestrated by speculations of the outcome of the France presidential race...

Did FED find another tool to influence the economy?

The protocol showed that, after retreating from near the zero-interest rate...


Caution is side-lined in the markets

The UK PMI index in the services sector exceeded expectations rising to 55.0 points against the 53.5 points forecast indicating expansions in the sector...

Is WTI about to go up again?

The Oil price has formed a bullish engulfing in the 3rd point of the ascending channel in the weekly chart...

Dollar strengthens on Fed talk

The dollar retreated from four-and-a-half month lows after the speech of Fed’s chair Janet Yellen, who noticed a stable economic recovery...


Is it the end of the US stock rally?

The demand for safe haven assets is declining, as the US stock market that was doomed to collapse remained stable. Investors are ready to jump...

Was populism defeated in Netherlands?

The Dutch voters resolutely put a brake on the populism wheel spinning across the globe such as the right-centrist party of Rutte, as election results showed his primary opponent Geert Wilder went up by a sizable margin...

US oil vs. OPEC - who will win?

US crude oil stockpiles soared for the ninth week in a row according to the EIA report...

  


Share: