INGOT Brokers AU | Fundamental Report (2017-06-20)

Fundamental Report (2017-06-20)


The dollar ended Monday’s trading session in the green after the comments made by New York Fed President William Dudley who expressed his confidence in increasing domestic inflation which has deteriorates recently, Mr. Dudley said that rising wages could derive the inflation up and gives the policy makers the chance to raise interest rates further this year.

Last week the Fed as expected raise interest rates by 25 basis points, however poor inflation data pushed investors to believe that Fed may not hike more during this year, however the recent comments by Mr. Dudley gave the markets some hope for further rates hike and that was reflected in the CME Group’s Fed Watch tool which showed an increase in traders outlook for possible rate hike by the Fed in December meeting to 47 percent from 41 percent last Friday.

Moreover, the Japanese Yen declined against the dollar and the euro, reaching its lowest levels in two weeks, the safe haven currency was pressured by recent news which came by some officials in bank of Japan about the possibility of rolling back emergency stimulus to support the economy. USD/JPY traded higher in Monday session, as the pair trades at 111.30. On the release front, Japan’s trade surplus improved to 0.13 trillion, but this was below expectations of JPY 0.35 trillion.

Furthermore, the Sterling ended today’s trading session lower by 0.4 percent as Britain began formal negotiations on its planned exit from the European Union. Brexit negotiations officially start today, but the mood is likely to be rigid and quiet as British negotiators meet with their European counterparts. With Theresa May struggling to put together a government, her position is much weaker than before the disastrous British election, and the Europeans are still smarting from the Brexit vote, which stunned the continent. Philip Hammond, the British finance minister, has said that he wants a business friendly and pragmatic Brexit and that no deal would be bad for the UK. His approach is much more conciliatory than that of May, who had threatened to leave without a deal. As for the Europeans, they have insisted that there will be no negotiations about a new trade deal, prior to progress being made on three key issues which are, legal status of EU citizens in the UK, status of the border between Ireland and Northern Ireland and the financial obligations of the UK to the EU.

Finally, the euro declined 0.4 percent against the dollar to trade at $1.1147, while it gained 0.1 percent against the yen to trade at 124.25 yen.



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