• American focus : the euro regained almost all previously lost ground against the dollar

Market news

17 December 2013

American focus : the euro regained almost all previously lost ground against the dollar

The euro exchange rate against the dollar has risen considerably , reaching almost a session high as market participants' attention more and more switches to the announcement of the Fed meeting . I also add that it would be the last meeting for Fed chairman Bernanke in this post - in the next month, he will give his powers Janet Yellen . Markets expect the Fed may decide to small decrease in monthly program to purchase assets , which currently stands at $ 85 billion per month. Nevertheless , the probability of this step is not high, despite the previously submitted data that were better than expected . Most likely , the decision to decrease the volume of the program will be made in the next year . Note that 34 % of the experts surveyed by Bloomberg, believe that the Fed will start winding down the program quantitative easing (QE) at the December meeting. Over 46% of the analysts interviewed by the newspaper The Wall Street Journal, to expect that the Fed will announce a reduction of monthly volumes of redemption of bonds , which now constitute the $ 85 billion before the end of January 2014 , as the outlook for the U.S. economy improved. While only 25% of respondents expect the Central Bank decreasing volumes quantitative easing (QE) at the December meeting.

Pound regained some lost ground earlier against the dollar, but still continues to trade with a noticeable decrease . Note that support for the pound had comments BOE Mark Carney. He said that the pace of recovery of the British economy surprised him , but the economy still needs strong support from the central bank . In his speech to parliament Carney said that while the UK GDP shows some of the fastest growth among the Group of Seven , the UK still faces challenges , including high unemployment and " flimsy " global economic growth .

" We are still in an environment where we need to for some time to carry out monetary stimulus " - said Carney .

The leaders of the Bank of England in August promised not to raise its benchmark interest rate to a historic low of 0.5% as long as the unemployment rate in the UK has fallen to 7%. According to them, this threshold can be achieved until 2015.

Strategy policy guidance " gives households and companies confidence that interest rates will not be raised as long as employment, income and expenses will not recover to sustainable levels ," - said Carney .

The Canadian dollar declined significantly against the U.S. dollar , responding thus to the U.S. balance of payments data . As it became known , the U.S. current account deficit , which is the sum of the balance of trade in goods and services , income, and net unilateral transfers , declined in the third quarter to 94.8 billion compared with the revised downwards from 98.9 to 96 , $ 6 billion deficit in the second quarter . Deficit decreased to 2.2 % of GDP , compared to 2.3% of GDP in the second quarter .

Reduction of the current account deficit due to increased net income . Also contributed to the reduction in the deficit reduction in net outflows for unilateral transfers such as government grants , pensions and other government transfers, private transfers . Increased surplus on services, however, the deficit on trade in goods grew . The trade deficit in goods and services grew in the third quarter to 120.7 billion dollars, compared to 118.1 in the second quarter .

Meanwhile , another report showed that U.S. consumer prices unchanged in November after falling in the previous month , becoming the latest sign of weak inflation, which may affect the decision of the Federal Reserve over the decline of quantitative easing. Consumer Price Index, which measures how much Americans pay for everything from furniture to medical care and housing, remained unchanged in the last month compared to October , said on Tuesday the Ministry of Labour . But the basic prices , which exclude volatile food and energy prices , rose 0.2 %.

Market Focus
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