19.07.2019: USD recovers after recent fall (USDХ, JPY AUD)
The US dollar weakened across the board after the Fed policymakers had dropped a hint about aggressive monetary policy easing.
It seems that trade wars have negative impact on the global economic conditions. The latest macroeconomic statistics prove this fact. Thus, the volume of export from Japan fell for the seventh month in a row while Australia posted downbeat labor market reports. Furthermore, foreign home sales in the United States almost halved for the past two years. New York Fed President John Williams delivered dovish comments on Thursday. He said that it was better to prevent problems rather than to solve them in future. Another Fed official supported the view of Mr. Williams, saying that measures should be taken before the macroeconomic statistics deteriorate.
So, these statements were a clear sign of an upcoming rate cut of 50 basis points in July. Amid that, the US dollar index took a nosedive, breaking below the level of 97. However, the press office of the Federal Bank of New York confuted these speculations, saying that statements of Mr. Williams were scientific in nature and had nothing to do with the further plans of the central bank. Today in early deals the US dollar came off lows and advanced to 96.85 while traders were trying to assess whose comments were more plausible and how deep the Fed rate cut may be.
The wide-spread monetary policy easing way may engulf Japan. The core inflation in the country reached 2-year low in June. Thus, the 2% inflation target became less achievable for the Bank of Japan. The ongoing trade conflict between the United States and China overclouds the prospects for the global economy. So, it is widely expected that the next move of the Japanese central bank will be monetary policy easing. The USD/JPY pair has gained ground in early deals, hovering near 107.67. The yen declined as the appetite for risk increased amid signs of progress in the US-China trade talks.
US Secretary of the Treasury Steven Mnuchin said that some information delivered by the media may not be totally credible. The negotiations with China continued, he added. The Australian dollar managed to gain decent profits on Thursday. The AUD/USD settled near 0.7080. However, it did not break this level and the quotes retreated. On Friday the Australian currency is seen to be trading in the red zone.
Though the American currency managed to recoup some losses, it remains under bearish pressure. Yesterday's comments of the Fed officials had a profound effect on the investor sentiment.
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