The bearish tone of the FOMC meeting on Thursday forced investors to turn away from risk bearing assets. This made the AUD/USD reach 0.7162 during the night preceding the meeting, but recovered on Friday and set its support line at 0.7150. The 0.72 threshold is proving to be the resistance point throughout the week, testing the push of the support lie at 0.7050. This is an important support area due to the fact that the breaking may lead to 0.0695, the next recent low being 0.6774 – the 2004 long term low.
Officials in Canada released on Friday the latest CPI (Consumer Price Index) readings. According to the new data, the prices rose as expected with 1.3% yoy (year-on-year). The energy prices seem to have been the center point of this rise, continuing to moderate the CPI hike. Also, an important factor is the gasoline price index, which went down 12.6% yoy in August. If we look at the seasonally adjusted data, the monthly CPI remained the same in August, after a 0.2% rise in July. It was also mentioned in the release that Bank of Canada’s core index hiked with 2.1% yoy in August, after a 2.4% similar evolution in July.
Also Friday, France’s Moody score has been downgraded to Aa2 from the previous Aa1, analysts considering this value balanced. Moody explained the decision by pointing out two key factors. One of them is the grimmer outlook on France’s mid-term economic growth which is expected to stretch to the end of the decade. The other important is a mixture between the low growths and the political and institutional confinement which together represent a challenging scenario in reducing the country’s high debt.
Pressure builds as Greece is approaching its 6 election in 5 years. Investors are all eyes and ears over the political debates in the country. Syriza and New Democracy, the two biggest parties in Greece, have both stated their intention on adhering to the bailout agreements, but risks hover on the election as it will probably surge a political bewilderment.
The weak sentiment around the greenback pushed back with more than 3% crude oil prices. The WTI (West Texas Intermediate) barrel is not doing so well, a part of the gains from earlier in the week were erased without a doubt. Price build up for the oil all week long, managing to test the $48.00 threshold on Thursday, but the FOMC meeting pushed back the trend to around $45.00. It can be observed once more how Fed’s uncertainty continues to unbalance the sentiment.
