|
Forex outlook:
The dollar traded steady against the euro on Thursday after the Federal Reserve held interest rates steady, as expected, and suggested that U.S. inflation pressures have eased. The dollar is trading around the levels of 1.3435 against the Euro, around the levels of 123.15 against the Yen and around the levels of 2.0020 against the sterling.
The Fed, in its statement, dropped a description of core inflation as "elevated." But it affirmed that its main concern was that inflation might fail to moderate. The removal of the word "elevated" from the previous statement indicated that the Fed was less worried about current price pressures in the U.S. economy. Analysts say that lessens the chances of prospective interest rate hikes. "The fact they took the word 'elevated' out of the statement stands out, and bottom line is a baby step towards a more neutral stance on rates," said Alex Beuzelin, senior market analyst, at Ruesch International in Washington. "The reason why the dollar's reaction to the announcement was muted, it's because the statement is pretty much in line with the market's expectation for steady rates. There won't be any increase (in rates), any time soon."
The Fed's decision matched the forecast of all 113 economists surveyed. U.S. interest rates compare with 4 percent in the euro zone and 0.5 percent in Japan, the lowest among major economies. Fed policy makers next set rates on Aug. 7. “Readings on core inflation have improved modestly in recent months,'' the Federal Open Market Committee said in a statement. ``However, a sustained moderation in inflation pressures has yet to be convincingly demonstrated.''
Gold: Gold bounced back on Thursday after hitting three-month lows the previous day, helped by physical buying, rising oil prices and data which showed inflation pressures are stronger than expected. "We are seeing that physical buying has stepped up and the volume of selling has certainly eased off from what was seen earlier in the week," said Paul McLeod, vice president of precious metals at Commerzbank in New York. Gold, traditionally seen as a safe haven for investors, has more recently been put in the same category as other commodities, which are considered riskier investments. A metals trader in London said $648 was a key point to get through and gold rose beyond the level on the back of stronger crude oil prices and further short covering. "The $652-$654 area is important for us and the market will not turn until we get over these resistance points," he said. Gold future contract is trading around the level of 651.50$.
Crude Oil: U.S. crude oil futures ended up sharply Thursday for the second straight session on worries over fuel supply after a surprise fall in gasoline inventories in Wednesday's government data. On the New York Mercantile Exchange, August crude settled up 60 cents, or 0.8 percent, at $69.57 per barrel, trading from $68.92 to $70.52. It was the highest settlement since Aug. 31, when front-month crude ended at $70.26. The intraday peak was the highest for front-month crude since Sept. 1, when futures hit $70.66. "It looked like the early rally was overdone," said Amanda Kurzendoerfer, commodities analyst at Summit Energy in Louisville, Kentucky.Crude Oil future contract is trading around the levels of 69.65$ per barrel.
|
