The FOMC press conference on Wednesday stated that the interest rate decision isn’t a unanimous decision. Janet Yellen also mentioned that the economic slowdown in the first quarter is due to the severe winter conditions and some trouble in the labor market. It looks like several participants think that the appreciation of the dollar and the fall in oil prices is affecting the economic growth, while the underutilization of labor resources was continuing to diminish. Within the FOMC group there are opinions that lean towards a growing interest by the end of the year, others see this decision welcomed in 2016 while there are some participants that would vote for this in June. The interest rate hike is still an option for this year, while the positive evolution of indicators as inflation, labor market and wage growth are crucial for the economy at this stage.
Meanwhile, the Bank of England announced yesterday the interest rate at 0.5%, the same level since March 2009. The political tension generated by the general election in May suggests a potentially result in another coalition government, like the current Conservative-Liberal Democrat one, because of the close competition between the Conservative Party and the Labour one. The central bank decided also to hold the size of its bond purchases under the quantitative easing program at 375 billion pounds.
GBPUSD is trading in a lateral movement (1.4634 – 1.4993), now the price being situated in the inferior region. Following the range’s rules, a rebound from the local support at 1.4684 would lift the quotation first to 1.4785 and then to 1.4890. The pound is losing strength against the dollar, but also against the euro. The actual decreasing tendency could be powered up after the May elections.
EURUSD is continuing the descending path. The fact that yesterday, the Greek government managed to pay off its liability to the IMF didn’t exalted the euro traders. Greece still has a deadline of 6 days to decide its fate. Besides all this, the euro’s weakness is being sustained by the QE program.
The report of the American oil inventories decreased WTI’s quotation to the 50.70 support level. It seems that the geopolitical tensions are absorbed by the price in a calmer manner, while the supply and demand forces are dominating the evolution of the quotations. In other words, the downward trend is currently gathering more market participants.
Gold’s quotation stopped its descending rally at the 1192 support level, close to the inferior side of the ascending channel. The breakout on the 1200 resistance level would push prices up to 1205 and possibly to 1212 dollars per ounce. On the short term, gold could benefit from a quiet time.
