Dovish Yellen: The dovish tone of Janet Yellen conference last Wednesday and the decision by the Federal Reserve to revise downwards their GDP forecasts and upcoming rate hikes have led the market trends in recent days.
The US central bank kept unchanged at 0.25% e 0.5% its interest rates and reduced the number of the cost of money increases expected in 2016 from four to two.
Goldman Sachs has intervened stating that ‘the prospects of the central bank were to be revised, and therefore the increases in interest rates expected for 2016 had to be three.’ The economists of this business bank say they do not trust the scenario painted by the Fed in the last conference, because there is no reason to change their outlook.
The latest listings unexpectedly accommodating of Federal Reserve pushed the dollar to a minimum of five months, squirted up the prices of raw materials, from copper to gold.
The greenback immediately paid the price, sparking a rally in commodities exchanged in dollars. All raw materials, especially precious metals and oil, were in positive territory in the markets on the day after the speech of Janet Yellen.
Thanks to the market turbulences, gold has gained more than 18% since January and more than 3% after the statement by Janet Yellen.
The price of US oil ended the fifth consecutive week of gains and the fourth for Brent, the longer period in this year. They have exceeded the threshold of $ 40 a barrel.
In the international currency war, the Fed takes the side of China, which desperately needs a weaker dollar. All this disappointed the Eurozone and Japan, which instead would like to see a weakening of their respective currencies against the greenback.
The dollar slipped to lows against the yen, reaching just above the level of 111 yen. Meanwhile, the euro strengthened to $ 1.13, negating the recent extraordinary monetary expansion measures decided by the Bank of Japan and ECB.
Two other central banks have had to make a decision on interest rates during the past week. The Bank of England (BOE) and the Swiss National Bank (SNB) have kept their interest rates unchanged respectively at 0.50% and -0.75%.
As for the Eurozone, it was announced the new data on labor costs for the fourth quarter of last year. After the previous level of 1.10%, it was recorded an increase to 1.30%.
The balance between imports and exports for the first month of this year is 6.2 billion euro against the 24.3 billion of the previous month.
In February, however, the consumer price index recorded a rise of 0.2% month-on-month, compared with the result in January to -1.4%. Compared to February 2015, inflation shows a decline of 0.2% (previous year: -0.2%).
Core inflation, excluding prices in food, energy sectors, alcohol and tobacco, hit a rise of 0.4% month-on-month (previous year: -1.7%) and a rise of 0.8% year-on-year (previous year: + 0.7%, consensus: 0.7%).
The consumer price index in Canada in February, however, disappointed the expectations. The Canadian inflation rose by 0.2%. The result of the previous month was 0.2%. On an annual basis, consumer prices increased 1.4%, down from the result in February to 2.0%.
In the core version, inflation showed a rise of 1.9% year-on-year and +0.5% on a monthly basis.