Daily FX: EUR/USD, GBP/USD, USD/JPY, XAU/USD — April 21, 2014
iFOREX | Apr 21, 2014 02:57AM ET
The British Pound slipped towards the downside after reaching over a four-year high. The latest string of macroeconomic fundamentals out of the U.K. have spurred speculation that the Bank of England could decide to raise the key cash rate. The minutes from the bank’s recent policy meeting will be released this week.
In Japan, the central bank continued to discuss the possibility of adding stimulus, but bank governor Haruhiko Kuroda intimated that the economy is slowly reaching its 2 percent target, thereby reducing the need for added easing. The Yen traded higher against the Euro but dipped versus the U.S. Dollar as the U.S. reported a lower than expected increase in Jobless Claims and a hike in the Philadelphia Fed’s Factory Index.
Lastly, the Australian Dollar declined versus the greenback as hopes that China will take action to fuel economic growth wore off, and as the U.S. Dollar regained momentum. The New Zealand Dollar traded mixed after sustaining solid weeks of gains on the possibility the Reserve Bank will increase the interest rate during its next meeting, which is scheduled to take place this month. The Kiwi came under pressure following news revealing a drop in dairy product prices and lower than predicted levels of Inflation for the initial quarter of 2014.
EUR/USD - Euro Sees Little Action
The EUR/USD declined, but saw very little movement throughout the past week while a vast number of investors were out for the Spring break or Easter Holiday. The EUR/USD remained low despite the fact that the European Central Bank continues to discuss the possibility of taking some type of steps to ensure that low inflation does not dampen the region’s economic recovery. As several board members have indicated, the Euro-zone is not out of the woods yet, but it’s improving slowly. The pair had gained, but dipped after the U.S. produced solid regional Factory metrics and upbeat Unemployment numbers.
GBP/USD - Minutes To Be Released
The GBP/USD traded lower after coming close to a 4½ year high as the U.K. released reports indicating that the level of Unemployment fell below 7 percent. The pair finished the week at 0.45 percent higher and on Thursday, it traded at the highest price since November of 2009. The stellar releases have spurred speculations the Bank of England could increase the benchmark interest rate before it had planned to do so, especially since Joblessness has dropped below the target threshold of 7 percent. In the days ahead, the central bank will issue the monetary policy meeting minutes.
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USD/JPY - Japanese Data Disappoints
The USD/JPY rebounded despite the fact that tensions between Moscow and Kiev continued. In Japan, the recent string of economic releases disappointed, while the Bank of Japan indicated that export levels may remain low as demand from abroad has declined. According to some analysts, Prime Minister Shinzo Abe lost the support of the people, even as he pledged to bring the country out of 15 years of deflation. Critics say that his measures are prompting a fast rise in inflation as prices have risen rather quickly due to a recent hike in sales tax. The construction sector is experiencing a slowdown and Consumer Confidence declined to the lowest level in almost three years.
XAU/USD - Tensions May Be Under Control
The XAU/USD dipped as investors believe the tensions between Russia and the Ukraine may be under control, days after the United Nations assisted in brokering a peace accord. The precious commodity plunged as investors captured gains following news denoting improvement in the U.S. economy, and as the greenback regained its footing. According to sources from the World Gold Council, China is set to cement its standing as the world’s biggest consumer of gold after India, and analysts predict that demand may reach 1,350 tons by 2017 which is 25 percent more than demand seen in 2013. The WGC added that for 2014, demand from China may not be as high, given the fact that the Chinese economy has slowed down. Futures for delivery in June slipped to $1,294.90 on Thursday before the Comex Division closed for Good Friday. The shiny metal dipped 2.34 percent after the U.S. reported positive data on employment and manufacturing, suggesting the American economy is rebounding.
Today’s Outlook
Today’s economic calendar shows that a vast number of markets are closed for Easter and there are no economic announcements.
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