The morning forex trades in Sydney resulted in decrease of the United States dollar in relation to major currencies caused by the declined possibility of the interest rates hike by the Federal Reserve. According to last data the USD was traded at 108.18 Japanese Yen and the Euro was traded at $1.5475.
Due to the senior forex analyst at Thomson IFR Markets – John Nonnan the Federal Reserve point of view still plays the main role in spite of the fact that the weak economic data lead to the decrease of the interest rate hike opportunity. So the sharp fall of the United States currency occurred throughout the night was caused also by the declines in New York Empire State manufacturing numbers and intentions concerning prevention of the inflation expressed by the European Central Bank officials.
As for the first reason – we can mention here that the New York Empire State manufacturing index decreased to the -8.68 level, and this turned to be the fifth consequent decline throughout the recent five months and quite larger than the one forecasted by the experts.
Concerning the Eurozone we should note a record growth of the inflation that reached 3.7 percent in the previous month thus leading to the announcements by the European Central Bank officials saying that the constraint of the inflation is the primary task the ECB faces.
And as the Federal Reserve decreased its intentions concerning the interest rates growth the markets will have to follow it.
Furthermore, according to Noonan the British pound seems to get some support before the issue of the UK consumer price report that is supposed to show us the changes of the inflation in the UK occurred throughout the previous month and caused the new talks about possible interest rates growth.
According to the senior economist at NAB Capital Markets – David de Garis the inflation may appear again after the increase of the oil prices. He has added that Federal Reserve doesn’t want any inflation growth meanwhile the European Central Bank prepares to the interest rates hike in the next month.