The US Federal Reserve decision yesterday to leave the rate unchanged was of the last concern for investors – they waited for clues how the Fed sees monetary policy evolution further this year. At the press conference, the Fed head Janet Yellen stated that global risk still bears great influence on the US economy, but positive shifts in the US employment and consumer growth leave room for further monetary tightening this year, less aggressive however, as it was conceived before. Yellen’s verdict was unfavorable for the US Dollar – their grip on the monetary policy loosens with the number of projected rate hikes lowered from 4 to 2 to the end of this year. The USD tumbled against all overseas major – EUR/USD gained 0.73%, climbing above the 1.13 level, USD/JPY caved in by 1% to 111.36, lowest since October 2014, USD/CHF dropped by 0.67% to 0.9702, AUD/USD surged 1.06%, as the growth is also fueled by an upswing in commodities prices, GBP/USD gains 0.60% to 1.4345 ahead of the Bank of England’s decision. The USD index, which shows the value of the US Dollar against the basket of other majors, dropped by 1.3% to 95.539.
The projected growth of the US economy in 2016 decreased from 2,3-2,5% to 2,1-2,3%, while the forecast on inflation shifted to 1-1,6% from 1,2-1,7%.
The weekly EIA report released yesterday, showed the US crude inventories rose less than expected (1.3M barrels versus 3.2M barrels projected) to 532M barrels, crude imports fell by 355 000 barrels to 7.7M barrels. With the weakened US Dollar, Crude prices spiked by more than 2%, with WTI finding resistance only on the $39.60 level, and Brent rising to $41.44. The growth is propelled by the “guaranteed” Oil exporters meeting in April, where an agreement on output freeze will be probably reached. We don’t anticipate crude prices to fall lower than the $35 level, as no negative factors are now creating pressure for Oil, as well as more and more bulls are dropping off their positions. Though the growth may be restricted, as the current outlook of the US economic growth present a hindrance for a sharp increase in demand in the near future.
Gold trading on Comex surges by 3.27% as the Dollar weakens, Silver surges by 3.49%, Copper adds 2.53%.
European markets are declining today, despite the commodity producers’ advances with Anglo American and Glencore rising 9.58% and 8.87% respectively. FTSE 100 lost 0.33%, DAX declined by 2%, CAC 40 dropped 1.70%, Euro Stoxx 50 lost 1.91%. Chinese extended their weekly gains with CSI 300 rising 1.11% today, Hang Seng adding 1.21%, Nikkei 225 and Topix are in a slight decline, losing 0.22 and 0.11% respectively.
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