A week of reports has just passed by. The market has moved mostly at the publication of the minutes of two of the most influential central banks of the world: Federal Reserve and European Central Bank.
The members of the FOMC, the decision-making committee of the US central bank, are divided on the need to raise short-term interest rates. According to the minutes, the bank during its July meeting showed some relief because the risks that threatened the economy could not be achieved, but found itself in disagreement about the decision on interest rates.
The Fed wants to wait for new macroeconomic data to better assess the health of the economy. A particular worry is inflation, although the risks are falling thanks to the continued improvement in the labor market.
The immediate reaction of the US dollar has been a rapid rise, before returning to descend. The euro-dollar exchange rate reached its highest level of the session as the dollar against the yen has marked new intraday lows.
The break and permanence above 1.13 after the release of the Fed minutes, has represented the important step that was missing to EUR / USD for almost two months.
The shoot of the US dollar in the last session did not compromise in any way the great recovery of the euro, which can disrupt the balance of recent weeks thanks to the difficult period of the greenback.
As for the yen, however, he returned to serve as a safe haven currency after the release of the Fed minutes. The dollar-yen exchange rate has now broken the inertia with the psychological threshold of 100, setting this week the new post-Brexit low at 99,5.
The dollar-yen exchange rate is undoubtedly the cross that suffers periods of this type, in which the US currency is the Fed’s uncertainty victim and the yen comes in the sights of those looking for a Forex investment with minimal risk.
By indecision of the FOMC, we can go instead to the optimism of the ECB. The Governing Council of the European Central Bank states that the effects of the YES victory at Brexit of the UK referendum in late June turned out to be weaker than estimated.
The ECB, according to the minutes published on Thursday, found itself in agreement on the need to show to the market a cautious optimism on the recovery of the Eurozone economy. The inflation still remains the Achilles heel of the Eurozone and the final data of the consumer price index of July confirmed this scenario (-0,6%).
During the week just started there will be no significant market movers at least until the day on Thursday.
From Thursday there will be a symposium in Jackson Hole, the annual event where Yellen may offer new directions of monetary policy, as well as market movers on durable goods and especially on Friday with the US GDP of the second quarter.