The Federal Open Market Committee of the US Federal Reserve is scheduled to meet tomorrow 1 August 2013 in what is expected to be a closely observed event by followers of the financial markets. The influential committee that makes and regulates policy over matters such as the Fed’s purchasing and selling of securities as well as many key aspects of the American monetary policy.
Analysts point to questions in the markets regarding the future of the Fed’s stimulus activities and the volatility that has resulted from various statements on the issue from Federal Reserve Chairman Ben Bernake over possible plans to cut back on the current track where the Fed has purchased $85 billion worth of bonds and other securities in an effort to boost the economy, as cause for carefully observing the outcome of this meeting. In addition, the FOMC is expected to release their rate decision for the coming month.
Analysts believe that the USD is likely to fluctuate significantly following the release of the minutes of this meeting, thus increasing its volatility in the market. Traders are advised to proceed on the USD with caution..
Yen Hit by Poor Numbers and Concerns Over Stimulus
Speculation that the Bank of Japan may decide to increase its stimulus activities coincided with unsatisfactory production figures, helping to drive down the value of the Yen in its trading against its rival currencies.
Analysts note that in the wake of the recent re-election of Prime Minister Abe, many observers have been unsure of how the government is likely to move forward on various labor and economic reforms, in addition to how it will react with its quantitative easing program. The BoJ is thought to be seeking out ways to gradually boost inflation with the goal of encouraging growth. However, should the BoJ decide increase its stimulus activities, then the Yen can be expected to face further struggles down the road.
Analysts advise caution for traders looking to use the Yen in their currency pairings.
CAD Achieves Gains Backed by Crude
The Canadian dollar was reported on 31 July 2013 to have attained a one month high in its trading against competing currencies. Analysts point to the fact that the price of crude oil has continued to remain over $100 per barrel for the past 18 days. It should be noted that crude is Canada’s biggest export, thus playing an influential role in the economy.
Analysts note that Canadian crude has been helped over the course of the past month by concerns over the ability of Middle Eastern oil producers including Libya and others to make deliveries, along with fears that fuel stockpiles in the US are continuing to dwindle. As summer driving in the US is expected to increase over the month of August, prices can be expected to remain high.
Analysts advise traders that the price of crude and the CAD are likely to continue to remain strong over the near term inline with the current market conditions.