A bullish presence on the market

19 October, 2016

The Dollar upturn seen in the recent weeks that was influenced by the firm belief in a rate hike of December fizzles out, after Yellen’s speech and the downbeat US inflation and manufacturing data. The Federal Reserve head highlighted that under the low rate hike odds for December the gradual tightening of financing conditions and benefits of running high pressure economy increase. Regarding the US economic updates, the Empire Manufacturing report which accesses the business conditions in New York Manufacturing sector fell to -6.8 points from the previous -1.99, as the analysts expect a gauge at the 1st point. The Capacity Utilization, which reflects the degree of usage productive capacity, fell to 75.4% slightly falling short of the 75.6% projection. The US consumer inflation index, the main gauge of inflation in the country, rose by 0.1% in September, trailing below the estimate of 0.2%. The core inflation, which is evidently less volatile also fell short of the forecasts.

EUR/USD pair stalls near a 1.10 ahead of the ECB meeting on Thursday waiting for the bank’s decision on bond-purchase program. The US dollar was under pressure after the vice-president of the Federal Reserve System, Stanley Fischer said on Monday that economic stability may be jeopardized by the low interest rates, as “it is not so easy” for the FED to raise rates.

The pair GBP/USD showed signs of a bullish presence rising by 0.74% to 1.2274 after the UK Office for National Statistics reported in September that the CPI rose to 1.0%, which is 0.1% higher than projected, adding 0.4% from 0.6% growth in August. The pickup in the inflation became the highest since November 2014.

The core inflation growth (which excludes inflation on food, energy, alcohol and tobacco) accelerated to 1.5%, beating the 1.4% estimate and was 0.2% higher than the August change.

Safe heaven currencies together with Gold rose as the Dollar weakened.

New Zealand consumer price index rose by 0.2% in the third quarter, exceeding the expectations of no change, after increasing by 0.4% in the three months of June. Meanwhile, the Australian dollar found support after the head of the Reserve Bank of Australia Philip Lowe said that he feels comfortable with the current AUD exchange rate. In his first speech as governor Lowe also noted that the current low level of inflation is not an unprecedented phenomenon,undermining expectations of further rate cuts.

At the same time, the pair USDCAD fell by 0.43% to 1.3070 level.


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