Dollar ends week lower

Concerns that the US Federal Reserve (FED) may lower its unemployment threshold at 6,5 % before terminating monetary easing and its USD 85 Billion monthly bond buying program, sent the dollar lower on Friday. Euro/USD climbed 1,1 % to 1.3282 over the week. The dollar as lost against a basket of currencies. Inflation data Prime Minister Shinzo Abe’s Upper  House victory, boosted the Japanese yen.  USD/JPY fell back from 100,32 to 98,50 yen a dollar. New Zealand dollar was the biggest gainer of the week gaining 2 % against its US counterpart.

Speculation about a lower unemployment threshold comes after FED Chairman Ben Bernanke insistence that any monetary easing remained data-dependent. This convinced investors that any raise in interest rates was still a long way off. Investors have interpreted FED forward rate guidance that an interest rate hike will come earliest in 2016. The speculation was triggered by an article in Wall Street Journal which immediately put the dollar and US treasury yield under pressure. If the report signals false alarm, USD will rally.

EURO gained ground on optimism on a turnaround in the Euro zone which is still in deep recession. Even if the Euro zone remains in contraction, the negative figures are better than previous months due mainly to the recovery in Germany which continues to deliver better than its fellow European members.  It is expected that the European Central Bank (ECB) will leave its interest rate unchanged when it meets later in the week.

The global equity market was in spite of good US-corporate quarterly results under pressure as China doubts on growth take hold. Indexes all over the world have climbed to new record highs, and technical corrections may be expected on this uncertainty. Gold and silver have consolidated last week’s gains after FED’s dovish attitude. Gold stays above USD 1300. Precious metals are helped by raising demand in China where sales volumes in gold and silver jewellery and coins are at record highs so far in 2013.   

Click here https://secure.mayzus.com/partner/regist to start earning money on Forex!