The US dollar is experiencing a flourishing time, representing the choice of both the traders excited about the American economic performance and the ones which exhibit risk aversion. The dollar is rising with clear movements in a wide range of markets, from the Sterling Pound to New Zealand dollar. Even if estimates about the interest rate hike were relocated to the late autumn months, FX traders begin to transmit bolder estimates in prices. Yesterday the real estate market has provided a positive image with the S&P/CS Composite-20 HPI is rising to 5% and the New Home Sales increasing to 517k.
Federal Reserve Governor Stanley Fischer (rumored to be the second most important person in the Federal Reserve) tried to temper the market momentum by highlighting the strong correlation of the interest rate hike to the macroeconomic data. The American dollar promises to continue to stay strong in front of the euro, New Zeeland dollar, Canadian dollar, Sterling Pound and especially the Japanese yen.
BOJ minutes brought bad news as many members believe that the consumer prices are sloping towards the downside because of the disappointing long term inflation expectations. The Japanese Bank changed its time frame for achieving 2% inflation to around the first half of the fiscal 2016 (which begin in April), while previously they were talking about sometime around fiscal 2015. The nationwide sales tax increase scheduled for the start of fiscal 2017 stirs concerns about the growth rate of the economy.
USDJPY is currently trading above the 123.00 support level, while the ascending tendency may be in trouble barely in the 124.13 area (the maximum of June 2007) and the 125.75 (on the long term).
The euro is facing serious problems as Greece launches desperate calls to the European creditors without whom it cannot pay debts that expire at the end of next week. Political instability has escalated also in Spain and Poland, a fact that is making the equities fall and the bond yields rise.
Later today the Bank of Canada will announce its overnight rate (the interest rate at which major financial institutions borrow and lend overnight funds between themselves). Market participants expect the bank to maintain the rate at 0.75%, while Governor Stephen Poloz might return to the issue of the declined price of oil. USDCAD quotation managed to overpass the 1.2400 resistance level and may risk a correction down to 1.2370, but the next targeted resistance areas are situated at 1.2485 and 1.2566.