Hopes High For More Quantitative Easing — Dollar Weaker

Tuesday FOMC statement will be closely watched to see what the world's leading central banks may have in store for investors pains disappear like magic. However, central banks around the world recently doing some form of intervention, even before global stocks fell for a second consecutive day, you wonder what tricks are allowed. These are the forces in motion that every action can be considered as a Reference to powerful movements without addressing the underlying problems.

Dollar - The dollar fell against a basket of major trading partners, while index futures staged a strong pre-market rally. Investors expect the recent fall in reserves compounded by a downgrade by S & P, the FOMC will inspire more incentives for growth and restore confidence in the markets to be announced. If they did, this can be considered negative for the dollar. The key question for the Fed's explanation of what to do to stop the bleeding. The Federal Reserve is one of those places where cooler heads prevailed and we were all surprised that the assertion that the reduction of a weekend which has already warned against external shocks and that it is Now the effect on the control of consumers and business confidence for the future. You can also try to talk about the latest work as part of an encouraging test. In short, the FOMC is unlikely to announce new policies today, despite the decline in stocks, for fear of adding fuel to the fire. You can, however, say that is prepared with an open wallet in case of the recent market turmoil had a negative impact on economic activity.

EUR - The euro has benefited from hopes that the Fed could use to stimulate further quantitative or at least say he was ready to open their doors to keep them longer. The euro reached $ 1.4275, while bouncing against the pound at 87.36 pence to buy. There was no evidence of a slowdown in the form of a weaker than expected German exports in June, down 1.2%, compared to an increase of 4.4% in May and all an increase of 0, 3% in the level of imports was higher than expected, was sentenced.

British Pound - The pound was slightly higher against the dollar at $ 1.6339 and is relatively low, given the recent performance as a safe haven in Europe. But perhaps it is better the tone of the euro is now a weight around your neck and prevent progress. There were also signs of weakness in the fabrication of current data, where industrial production is up in June, following a downward revision in the data of May In general, year after year, the exchange rate which is a contraction of 0.3%. Industrial production also disappointed unexpected fall in output of 0.4% annual growth rate to 2.1%. In another sign of a difficult external environment, the trade deficit amounted to £ 4.5 billion £ 4.0 billion, despite expectations that could be reduced.

 Japanese Yen - Yen strength continues as Asian stocks slid in early trade violently in the region. The losses were compared by the closure, but it was a horrible day that resulted in an increase yen to secure port areas. The unit entered the room with a yen to achieve the price at which the Bank of Japan intervened last week to sell and a decrease of three yen against the dollar. Traders were hesitant before, despite the clear trend towards risk aversion. While the actions of central banks failed to reverse the path of the yen again, they were enough to scare another challenge after the purchase of $ 58.4 billion to support the dollar. The dollar rose to 77.00 yen 77.64 yen early to buy the best of the day.

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Canadian dollar - while the market was busy discussing the possibility of an imminent monetary tightening a month ago, continued weakness in global stock markets makes investors to use their results in the low Canadian dollar to reverse. The biggest headache for the Bank of Canada is the sensitive nature of the external environment in which overlook the waves of financial problems abroad could lead to severe shocks felt in the national economy. Earlier Tuesday the U.S. dollar local has finally reached parity among the largest investors in risky positions relative to the Canadian dollar stabilized purchase of $ 1.0065 cents.

Australian Dollar - As the Canadian dollar is a nickel back against the dollar since early August is the strength of the Australian dollar has suffered. He lost 10 percent in the same time and eventually not reached parity with the dollar on Tuesday. The unit has been hampered by the strengthening of inflation data from China and the weakness of national data that represent a small demand for credit. Data ready for June remained unchanged, despite expectations of an increase, after rising 2.8% for investment loans in May, almost completely reverses the natural oscillations of 4.4% after rising 5% 4 a month earlier. The Australian went as low as $ 99.27 cents before recovering a more positive start to trade in New York, where he rose to $ 1.0256 cents.

Andrew Wilkinson
Senior Market Analyst