The FRS Assures Markets
Masterforex-V | Apr 21, 2014 08:32AM ET
The FOMC protocols publication inspired the “euro bulls” that allowed the currency pair to continue climbing up. As the minute timeframes show, there were intense discussions within the FRS concerning the unemployment abolition with rate from 6.5% as a guide to start increasing rates. The FOMC members have expressed legitimated concerns that the decision could be misunderstood by the markets.
Actually, the way it turned out, -- said the analysts of Roboforex, -- Janet Yellen’s saying put oil to the fire that we would see the first rate increase after “six months or so" after the QE3 ending. Dow began to fall immediately on such statements, and the dollar began to strengthen. However, the yesterday's records show that Yellen probably got excited, and in April 2015 they are unlikely to raise the rates.
Transition to the more qualitative assessment of the situation on the labor market has become a necessary measure. The unemployment lowering that had been caused by the reduction of the labor force (known level of participation that is only now started to rise), was a surprise for the FRS. But the misunderstanding of the regulator’s plans may be because of the absence of its clear guidance.
The FRS is concerned about low inflation.
Main core of the program was the FRS’s concern about the low inflation. Moreover, the regulator will continue to keep rates low until the indicator does not return to the planned indicators. This thesis from the protocols has become a driver of the dollar weakening.
According to the experts of Roboforex, the first four years of successful placement of Greek Eurobonds has become the additional positive factor for the growth of the currency pair. According to the results of auction the five-year loan papers were sold for 3 billion euros at 4.95 % per annum, which was below the expected rate. The event has become a landmark for the entire euro zone, as the Greeks return to the debt market has been prepared for a long time and there was a risk that investors would put the excessively high interest rates.
The recent statistics from the Eurozone is not the best -- there is a fall in industrial production in Italy and France. Besides, the French inflation slipped to 0.4%. But it all went unnoticed against the background that the FRS assured the markets. "The attraction of monetary generosity" with a low rate will continue for indefinite period.
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