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Old 20-03-2014, 14:22
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Default Re: Market news and trade recommendations by FBS

Mar. 20: Asian session

Asian markets moved lower on Thursday on concerns that the US could push up interest rates earlier than expected. In a press-conference after the FOMC meeting, Chairwoman Janet Yellen said the Fed could raise rates "something on the order of six months" after the bank shuts down its bond-buying program. Markets were surprised: it means that rates could be raised as early as April 205 —ahead of the late 2015 market expectation. As expected, the central bank reduced its QE program by $10 billion to $55 billion. US dollar strengthened versus the other major currencies.

USD/JPY jumped to 102.70 on the FOMC news, but retraced to 102.30 in early Asia. Nikkei 225 index lost 1.3%.AUD/USD consolidates 20 pips above the yesterday’s through at $0.9000.NZD/USD extended the yesterday’s drop, hitting a session low of $0.8520 on weaker-than-expected New Zealand Q4 GDP (+0.9% vs. expected +1.0%, Q3 reading revised down to +1.2%). Gold hit a low of $1326 today (lowest since the end of February).

EUR/USD has recovered some ground to $1.3840 after the yesterday’s 120 pips drop to $1.3810. GBP/USD followed the euro, recovering from the low of $1.6510 to $1.6540. USD/CHF hit a high of $0.8810 in the US session. Swiss National Bank will announce its monetary policy decision at 8:30 GMT.


SNB maintains the EUR/CHF peg

The Swiss National Bank left the minimum exchange rate unchanged at 1.20 francs per euro and is ready to enforce it if necessary “by buying foreign currency in unlimited quantities, and to take further measures as required”. The 3-month Libor rate was also kept unchanged at the 0.0–0.25% range.

The regulator explains that the CHF is still high and “with the 3-month Libor close to zero, the minimum exchange rate continues to be the right tool to avoid an undesirable tightening of monetary conditions in the event of renewed upward pressure on the Swiss franc.” SNB's current inflation forecast is at 0% for 2014 and at 0.4% for 2015, in both cases 0.2% lower than the previous estimates. In 2016 the central bank expects a 1.0% rise.

The SNB acknowledged the continued recovery in the EU in Q4 of 2013, but pointed out that risks remained, such as low inflation, uncertainty about the health of Europe's banking system, political tensions and weakness in key emerging markets.
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