Forex Trading Library

Japan’s inflation to accelerate “considerably”

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The EUR/USD has missed keeping up the pace with the session start thresholds, extending Euro’s loss 4th time in a row with today’s session closing. Although the evolution we saw today, analysts all agree that this downtrend doesn’t mean that further corrections are improbable, on the contrary consolidation is still not in sight. Although missing the morning high, prices as of today took down the pitch of yesterday, the lower threshold from tonight being above the prior days’. This doesn’t come as a surprise due to several prior warning signs. Looking at the price evolution, it can be easily seen that resistance keeps around 1.0920, the same as the one in 7th of July.

Shifting towards Great Britain, June’s government borrowings went down less than forecasted but still reached a 7 years low. This shows that the shift in the economic policy is keeping afloat the public sector and implicitly the public finances. Translating into raw figures, the debt fell at around 9.4 BGBP from 10.2 BGBP compared to June, 2014. The expected benchmark (missed) was previously set at 8.5 billion, stated in a conference press the Office for National Statistics exactly a week ago. Taking a step back and looking at the first three month of FY (fiscal year) 2015-16 compared with the first three months of the previous FY, the April-June public sector net borrowing went down 20% reaching 25.1 billion.

Asia released its minutes of the meeting with both BOA and BOJ stepping out from the meeting room. The news releases didn’t brought something new or unexpected in both cases, this being also reflected in the currency’s evolution, both Yen and Aussie starting the NA open mostly unchanged against the dollar.

In BOJ’s meeting though, investors took note about the inflation forecasts heading the right way, suggesting that Japan is not eager to expand its capital expenditure regarding assets. Regarding the fact that BOJ inflation forecasts have lowered the expected value, theoretically we shouldn’t face any additional increases in the monetary policy rates.

A hot topic for the time being is the petrodollar. Last week, as most of you know, Iran has agreed upon lifting the supply restriction, effects “spilling” directly into the open market. Price drops are to be expected due to the 1.8 – 2.4 million barrels per day addition to the market, in 2014 the exports being at 1.6 million bpd. Although analysts are sure how the petrodollar will be affected, influences over the FX market still remain in twilight.

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