Daily Market Review - 04/17/2014

EUR/USD

The Euro continues to appreciate. Apparently it is testing an immediate resistance at current levels. It doesn’t seem to be a big challenge for the currency. Crucial resistance is at 1.3900.

USD/JPY

The pair is retracing a bit. Nevertheless general outlook remains bullish. Resistance is at 102.30. Support on the downside remains at 101.30.

GBP/USD

The Pound continues to grow well. The up slanting trend line is quite steep, so it suggests a quite strong trend. The levels at which the pair is now are the highest in over a year.

Market Review

Yellen continues making announcements. On the meeting of economic club in New York in her speech she has stated that the recovery of the US economy might be unable to return the inflation to the goal level of 2%. According to her words the high level of unemployment didn’t have an expected negative impact on inflation, that’s why stabilization on the labor market is likely not to lead to inflation.

At the moment yearly inflation in the USA is around 1%. On last meeting Yellen suddenly hinted at the spring of next year as a possible reference point of the first rate increase, what caused turmoil on the markets. Subsequently a lot of FOMC members have attempted to mitigate the comment, converging on the opinion that the position of the regulator has been misinterpreted and no one is going to cease soft policy.

Recently she corrected her mistakes saying that the start of the cycle of the rate increase fully depends on the stat of employment and inflation. And the more time is needed to reach goal levels of these indices the longer the rate will remain on the current minimum level. At that earlier we’ve been aware of some landmarks (notorious unemployment level at 6.5 for instance).

Now the FRS is going to assess the situation in a different way. And here there is a full freedom in interpreting of statistical data. Comments of Yellen on the labor market are quite interesting. Current unemployment according to her words at level at 6.7% is approximately 1% higher than the FRS goals. Salaries now are growing with minimum historical pace, what also creates obstacles on the way of economic recovery.

Economic Calendar

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