Dollar stays soft today and recent decline extends on speculation on Fed' forward guidance in next week's meeting. An article by WSJ argued that FOMC members are going to have a debate on modifying the statement to clearly distinguish between the asset purchase program and interest rates. And, it would possibly refine or even revise the forward guidance language to emphasis that interest rates will stay low for long. Besides, while markets have been speculating that Fed will taper the $85b per month asset purchase program in September, Bernanke has clearly stated last week that it's "way too early to make any judgement". Market participants will also be keen to get more hints about the timing of the tapering. As for now, dollar will likely stay weak against other major currencies before the week closes.
In the Eurozone, the July ECB Bank Lending also surprised to the downside. Same as the situation in June, outflow of new loans was reported in both households and non-financial corporate (4B euro and 12B euro respectively). For 2Q13 as a whole, negative flows have reached 46B euro for businesses and 3B euro for households. The report indicates that banks are still tightening their credit standards, suggesting that banks continued to view the economic and financial outlook in the 17-nation bloc as uncertain.
Yen extended rebound today as inflation data showed that national CPI rose more than expected to 0.4% yoy in June. Tokyo CPI core also accelerated to 0.3% yoy in July, inline with expectation. Technically development in yen crosses argues that more upside in the yen would be seen. USD/JPY has breached 98.89 minor support while GBP/JPY also breached 152.04 minor support. We'd possibly below yen cross accelerates downwards next week.
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Daily Report: Dollar Soft On Fed Speculation
Published 07/26/2013, 04:58 AM
Updated 03/09/2019, 08:30 AM
Daily Report: Dollar Soft On Fed Speculation
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