Forex Markets Remained Subdued
Meanwhile, moves on Forex markets remained subdued. The raft of central bank speakers failed to provide much in the way of, fresh direction. ECB President Draghi, as expected, was dovish in tone, highlighting the strong easing bias of the Governing Council. Elsewhere, Fed Chair Yellen’s speech (first public comments since October payrolls) did not touch upon monetary policy. Remarks from other Fed speakers did not offer any new insights.
In level terms, EUR/USD briefly tested below $1.07 and also above $1.08. However, for the most part, it spent the day in the $1.07-1.08 range. EUR/GBP tested above the 71p mark. It opens just below it this morning. Meantime, cable (GBP/USD) continued to trade around the $1.52 level.
Today, the focus switches back to the macro calendar. We get the key Eurozone release of the week, Q3 GDP. Already this morning, German and French GDP data for the third quarter have printed in line with forecasts. Thus, the Eurozone number should follow suit (forecast +0.4%), and therefore it may have only limited impact on the euro.
We also get the key release in the US, October retail sales. They will be looked to for an early read of the all-important consumer side of the US economy in Q4. The pace of growth is forecast to pick up, which would be consistent with the Fed beginning to hike rates in December.
Dudley & Fischer happy to move interest rates
William Dudley believes that December is a good opportunity to move interest rates from near zero. Once this has been accomplished he forecasts a slow and gradual move to higher interest rates. The vice chairman of the Federal Reserve, Stanley Fischer now supports this view that December is the best time to move interest rates.
Interesting comments from James Bullard, St. Louis Fed President suggested that this time around the Federal Reserve will not emulate policy of the early 21st century with quarter point move per meeting or the quicker moves of the 1990’s. James Bullard will have a vote on Federal Reserve policy in 2016.
Ultimately this is due to a strengthening dollar against the major world currencies which is thus dampening the rise of inflation. Currently inflation in America stands at 1.3 percent. As a result Dudley and Fischer are expecting inflation to meet the Federal Reserves requirements in 2016. Read more
Currency bloc countries post poor data
The euro weakened as lackluster growth in the currency bloc’s biggest economies boosted speculation the European Central Bank will cut its deposit rate and expand its asset-purchase program next month. Germany’s gross domestic product rose a seasonally adjusted 0.3 percent in the three months through September, after increasing 0.4 percent in the previous quarter. French GDP also expanded 0.3 percent, having stagnated in the April-June period.
Aussie rebounds
The Australian Dollar rebound yesterday after it posted very strong employment figures. As a result this pushed a rocket under the currency, which trades at AUD/USD $0.7135. Expectations now are that the AUD/USD could break the $0.72 mark depending upon retail sales for America.
However over the long term analyst are worried about the labour market and persistent low inflation even while the labour market improves. While in the short term, China will be the Aussie’s cap as China continues to post weak economic date. The Aussie is seen as a prompt and indicator for the strengthen of the Chinese economy.
Mike’s minutes: proof you can’t manipulate house market - New Zealand
TransferMate awards:
In other news, TransferMate have been short listed for the eir Elevation Awards.
TransferMate new service:
In the meantime: we would like to announce a new receivables service where we can collect money for you at better exchange rates and cutting out receiver/sender fees.