The positive news and comment from New Zealand and Australia strengthened the downtrend of the dollar

While the currency markets wavered, hesitating to jump into a train of risk on the New York session, Wall Street took the bull by the horns, and the DJIA index Breaks at 10 000 points for the first time since October 2008. Euro and the Australian dollar managed to reach cyclical highs against the U.S. dollar, however, the decline of U.S. T-bills after the publication of the protocol of the Federal Committee on Open Market (FOMC) samortizirovalo falling dollar / yen.

According to the protocol, the committee members cautious in assessing the prospects for economic recovery. They recognize that it has already begun, but will be “quite moderate.” Also at the meeting, the committee discussed the fate of the program purchase securities secured by mortgage, and some members expressed their willingness to extend the program, which initially led to increased sales of the dollar. However, later in a statement it was said that some representatives of the committee suggested that the program is gradually reduced to nothing and the complete cessation of purchase of assets by the end of the year. Circle. In general, the emphasis of the application was that the Fed still intends to pursue a “low interest rates for an extended period of time.”

With regard to statistics, the U.S. came out strong data. Total retail sales for the month decreased by 1,5%, since the effect of the program “lumber for NAL” passed, but sales excluding automobiles unexpectedly rose by 0,5%. Costs of the population in the 3 rd quarter increased 3%, whereas the ratio of inventories and sales sank to 11-month low. British statistics again pleasing to the eye, and the mood in the market has risen so much that started in a real hunt for the top stop-loss on the pound. But statistics from the eurozone has disappointed. Industrial production grew by only 0,9% against the forecast of 1,2%, although the players there and then forgotten about it and began actively buying up euros in a falling dollar.

In the Asian session, the mood in the markets shaped the news from neighboring countries. The first catalyst was a report on inflation in New Zealand. Consumer price inflation in the third quarter grew by 1.3% quarter / quarter and 1.7% y / y against the backdrop of rising prices for food, fuel and local rates. This unexpected increase in inflation, coupled with the rise of the production activity of New Zealand in September for the first time in the past 17 months may be a strong base for the RBNZ to abandon its policy of monetary easing is already at the next meeting, and it helped New Zealand dollar approaching close to 15-month highs.

Next came the Australian dollar, when the chairman of the RBA Stevens delivered a speech titled “Keeping monetary policy during the crisis and the economic recovery,” which stated that the central bank can not afford to falter in the case of interest rate increase, given that the risks to the economy failed to materialize. So he thought it would be reasonable if they change the extreme policies of the low rates to more neutral, although he did not go into details. The yield on the Australian Securities began to grow rapidly after these comments, and the Australian dollar exchange rate recorded a new 14-month maximum above the level of 0,92.

Movement in these countries affected the dynamics of the other major pairs to a lesser extent, although the euro came even closer to the psychological mark of 1.50 dollars, the pound has overcome the resistance of 1,6025-30.

Currently scheduled several interesting reports in the U.S. in research production activity in two main regions (the index and the Empire State FRB of Philadelphia), and the primary applications for unemployment benefits for which data indicate a slight improvement on the housing front, while the level applications are still high. According to forecasts, the results of this week, not much will be different from the results of last week at the level of 520 thousand is also the focus will report on inflation, especially given the unexpected performance in other parts of the world.

Saxo Bank