Daily Market Reviews by MAYZUS
22 MAY 2013: BERNANKE HOLDS THE KEY TO THE STRENGTH OF THE USD
DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments
Global markets traded steadily yesterday building up to the publishing of the Federal Reserve’s minutes from the last BOD meeting in April/May, and Ben Bernanke’s statement to Congress later today. After a small correction on Tuesday, the USD continues to strengthen and is up close to record high against a basket of currencies, DXY.
As proven over the last few weeks, the overall trend in the USD is pointing up towards all currency pairs in spite of a day or two of declines. This trend is supported by three main factors; the forecast for the US is better than for any other economy, Europe is ridden with recession and Japan is concentrating its efforts on increasing the inflation to the 2 % target.
The upswing in the US economy is mainly due to its monetary easing and FED's loose monetary policies. FED representatives have, over the last few days, indicated that the bond buying program will soon come to an end. If Bernanke “sneezes” today and states the same as his local FED representatives have done, it would mean a further strengthening of the USD.
A weaker Euro and Yen over the last few hours seem to indicate that this is what markets expect. After the Japanese Economy minister talked the Yen up earlier in the week, he seems to have been reprimanded by superiors, and the Yen continues its free fall. The International Monetary Fund, IMF, in a report today, urged Swiss authorities to weaken the Franc by unwinding its currency reserve funds. The Franc has already depreciated 3,7 % towards the Euro in 2013.
Precious metals continue to fluctuate, wildly searching for direction. The large increases in gold and silver throughout Asia and early European trade was quickly eaten by new steep falls. Oil prices keep steady. Smaller than expected English inflation strengthened GBP and gave the markets hopes for loser monetary policies, meaning more money printed by the Bank of England.
Copyright: MAYZUS Investment Company Ltd
The American dollar was higher against the Canadian dollar on Thursday. Data had shown that the American economy didn’t really meet expectations in the second quarter in its calculated growth with jobless claims increasing below forecasts for last week. The USD/CAD had touched 1.3026 during early U.S trade. The pair has last reached this height since Tuesday.
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MAYZUS Investment Company (formerly United World Capital) is proud to provide daily market reviews by the well-known financial expert –Mr. Arne Treholt, a former Political Secretary to the Minister of Shipping and Foreign Trade, then Deputy Minister of Law of the Sea of the Norwegian Royal Ministry of Foreign Affairs. He also held the position of Counselor for Economic Development and Social Affairs at the Ministry of Foreign Affairs, and was member of the Norwegian Mission to the United Nations, New York. At the moment Mr. Treholt is a Vice President and a Business Development Director of MAYZUS Investment Company.