FOMC Minutes enables USD to benefit
The USD continued to appreciate on Thursday, but after all the reserve currency may come under pressure in case the Federal Open Market Committee (FOMC) Minutes gives impetus to the speculations for added monetary support. Since the FOMC puts into action ‘quality guidance’ for monetary guidelines, the central bank may be open to extend the open ended asset buying program ahead of the $85B monthly limitations, and the new rhetoric may reduce the appeal of the USD as the working group goes on in its easing cycle.
But in any case the Fed may be more neutral this year, as the U.S. economy gradually recovers and gathers its pace, and also the reserve currency may keep on to retrace the earlier declines of 2012 if the Fed softens its tone for monetary policy.
Slowdown in private lending for the 7th consecutive month
The euro was not able to keep its range bound price action that was carried over from 2012 as the EUR/USD declined to a low of 1.3080, and the single currency remains ready to face added headwinds in 2013 as the debt crisis prolongs to drag down the Eurozone economy.
Since the basic outlook for the Eurozone is rather dim, it is hoped that the ECB will show a greater eagerness to further lower the benchmark interest rate, and the near term peak around the 1.3300 figure to encourage a bearish stance for the single currency as the EUR/USD pair exerts to hold above the 38.2% Fibonacci retracement from the 2009 high to the 2010 low in the region of 1.3120. Consecutively, the EUR/USD may rebound from December (1.2875).
Yen continues to rise against its rivals
The Japanese yen continued to rise against all of its 16 most traded rivals amidst apprehension that the U.S. Treasury will soon use up all its aggressive measures taken to keep on funding the government by the end of March.
The yen climbed 1% to 113.98 per euro. Japan’s currency gained 0.4% to 86.97 per USD after weakening to 87.36, which is the lowest since July 2010.
Much volatility for crude oil
There were major gains in the crude oil prices in previous trading days, which reached its pinnacle on Wednesday, soon after U.S. policy makers stated that they had agreed on a budget accord and investors moved their funds to riskier assets. Crude oil, which had traded as high as $93.78 throughout Wednesday afternoon session, has since fallen dramatically. The ADP Non-Farm Employment Change has the largest impact on crude oil prices.
The price of NYMEX WTI for February delivery was trading marginally lower on Thursday as the market weakened after Wednesday’s strong gains. The NYMEX February light sweet crude oil futures ended Wednesday’s up $1.30 at $93.12 per barrel, after trading in a $91.56 to $93.87 range.