Some important issues of the passing week for coming week.
Fed's decision to present a plan to depart from the QE resulted in an increase interest rates for the U.S. dollar market, but also for other markets. At some point, just because the FRA contracts for EUR market discounted almost complete additional interest rate hike in view of two years. It's not like the central banks in Europe.
Relevant entrance was also a new BoE chief Mark Carney. In a communication after the meeting, the BoE wrote that concerned about the increases of yields, which can jeopardize the the initial economic recovery. Central Bank only in August is expected to present new targets not only inflation, but also the unemployment rate, but now Carney intimated the financial markets, in which direction will change policy under his leadership. The result is a decline of yields for the GBP market and a clear weakening of the pound.
Fed's decision to present a plan to depart from the QE resulted in an increase interest rates for the U.S. dollar market, but also for other markets. At some point, just because the FRA contracts for EUR market discounted almost complete additional interest rate hike in view of two years. It's not like the central banks in Europe.
Relevant entrance was also a new BoE chief Mark Carney. In a communication after the meeting, the BoE wrote that concerned about the increases of yields, which can jeopardize the the initial economic recovery. Central Bank only in August is expected to present new targets not only inflation, but also the unemployment rate, but now Carney intimated the financial markets, in which direction will change policy under his leadership. The result is a decline of yields for the GBP market and a clear weakening of the pound.
Similarly, the ECB commented, adding in the message view that in the present circumstances, "We're Keeping Rates Low 'For An Extended Period Of Time". At first glance, this is not especially innovative. However, it is worth noting several factors. First, the timing of such a declaration is not accidental - it is a assertive response to the increase of yield in recent times and a desire to show the differences in terms of the Fed. Secondly, the statement that follows after the series of positive data from the European economy. Finally, Draghi is not as strong as Bernanke or Carney. He has a strong opposition in the form of the Bundesbank, whose head not so long ago warned against maintaining low interest rates for too long. Despite this, Draghi, step by step, consistently changing its policy of the ECB. With such a strong movement of the ECB, the reaction to the EURUSD market is fully justified.
Additional information:
In the section "Video Analysis" you will find a link to my channel on youtube, where will be soon test video. And if all goes well in the future will also appear my analysis on oscarjp-chrimatistikos youtube channel.
regards,
oscarjp
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