Daily Market Review - 05/23/2014

EUR/USD

So the Euro is going beneath support. The breach is not to strong, so it might rebound and go back up. Nevertheless the bias is bearish and most likely it will continue to decline slowly.

USD/JPY

The pair is going down from 101.81. Apparently resistance was too challenging for the pair to overcome. The outlook at least in the short term for the pair is bearish.

GBP/USD

The Pound continues to appreciate. The upward move continues approximately along the up slanting trend line. If it is broken we might see a trend reversal.

Market Overview

Recent release of protocols of the last FOMC meeting pushed the Euro to break the minimum. According to “minutes” text, a lot of committee members are for being more open. It is about presenting of more detailed information about its plans on the beginning of Fed balance volumes reduction, which has expanded up to $4 trillion during the years of stimulating programs.

Currently regulator reinvests revenue from obligations, what supports effect from round of QE. The refusal of such actions will lead to gradual reduction of the balance, and will also weaken stimulating effect for the economy. It is assumed that the FRS will present a data and even volumes of potential reductions.

More over specific economic triggers (like unemployment level) served as a reference point for raising of the rate and only with Yellen in office has been finally abolished. Also some FOMC members make claims about the necessity to define terms for beginning of rates increase after unemployment stabilization and inflation level.

There is a full concession in the FRS on the issue of exiting the QE3. Monthly purchases of mortgage and treasury bonds have been already reduced from $85 billion to $45 billion. And regulator doesn’t intend to stop. The key factor of decision making on the rates is still the labor market. More over it has been announced earlier that the FRS will regard the situation in general and not just unemployment exclusively. In spite of quite strong statistics on work places a lot of Americans are not working full day. And long term unemployed mostly remain outside labor market.

Economic Calendar

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