IAFT Weekly Economic Review

Last week a number of events has occurred , that were able in some way affect the currency market. Published data on consumer inflation in Australia were much lower than the predicted values, that prompted speculations on lowering by the Reserve Bank of Australia of interest rate. On this backdrop, the Australian dollar was subjected to a large-scale selling, falling against the US dollar to support in the area of 0.7548. Fears of market participants were not in vain, because today the RBA lowered the rate and aussie/dollar is testing the support again. Pressure on the pair will remain.

Following the meeting that was held last week, the Federal Committee on the US FRS open market did not raise the interest rate again. This decision was expected, so market reaction was negligible, same as the fluctuations of the US dollar against many of its competitors. Not able to stir up the markets and the FRS's comments, as they were again impregnated with caution about the US economic prospects, and with them the prospects of further tightening of monetary policy.

The main event of the week was the meeting of the Bank of Japan. The rapid growth of the Japanese yen was the reason for the expectations of introduction of by Japanese central bank of additional stimulus measures, but contrary to this expectation, he did not take any actions. Thus, the Central Bank gave a "green light" to the strengthening of national currency, which, in fact, has happened. The dollar paired with it broke the important support in the area of 108th figure and now stubbornly approaching the 105th, on what IAFT traders should pay attention. From Japanese officials quite possible to expect negative for the yen rhetoric, but it is unlikely to be the reason for the reversal of the trend, as the currency intervention of the Bank of Japan at this point is unlikely. BlogLinks

Best regards, AffiLinks

International Association of Forex Traders