World trade indices mixed as investors continue to digest yesterday's Federal Open Market Committee (FOMC) policy statement at preparing for the Bank of Japan tomorrow (BoJ) announced.
Until now, Yellen and the company seems to have successfully navigate through difficult goals. The Fed had a difficult task of recognizing global market turmoil since last month historical rate hike while remaining dependent data - they seemed to have achieved this in their statement (there was no press conference scheduled)
as expected, the US Fed left rates unchanged at a day
the statement indicated that they continue to monitor global events and financial, while their outlook was considered slightly more "prudent". It is not surprising that there is a split decision in the interpretation of dealers. The "doves" argue that the Fed is not going far enough, while the "hawks" suggest that Mars rate hike remains on the table, although less likely. The Committee lowered its assessment of growth and suggested that perhaps the balance of risks could be tilted to the downside.
"The Committee monitors the global economic and financial developments and assess their implications for the labor market and inflation, and the balance of risks to the outlook."
The message of the Fed is falling into deaf ears when it comes to assess the price
The removal of "balanced risk" and return to "follow global developments" are considered essential to weakened expectations of a further tightening in March. fed fund futures are currently pricing in "a" full hike to the end of this year, not four-guided hikes offered by the Fed.
Regarding the U.S. economy, it is no surprise, there were more downgrades than upgrades. The FOMC lowered the growth of "expanding at a moderate pace" in December noted, "growth slowed late last year." In addition, household spending and business investment, which were said to have increased at a rate "solid" last month, said to be rising at a pace "moderate." Net exports reported being mild to again, the same as in December, but the term "inventory investment slowed" has been added.
However, it was not all negative . on the positive side, the Americans' conditions in the labor market improved further "and gains" strong "job (in December, the Fed went with" ongoing employment gains "in December) highlighted" some further decline "in slowing labor market.
On inflation, the Fed did not stray too far from its high-profile posts. The Committee noted that inflation was expected "to remain weak in the short term, partly due to further declines in energy prices", but it would increase to + 2% in the medium term these effects "transient" faded.
The immediate effect the dollar / US majors was a bit volatile, but so far it has not made significant leaps or pending now that the Fed has gone to see the risks " balanced "to try to access how world events will eventually affect their original perspectives" balanced ".
Reserve Bank of New Zealand (RBNZ) Stands Pat
After the announcement of the Fed was the Reserve Bank of New Zealand (RBNZ) turn. It was not surprising that the RBNZ kept rates unchanged at 2.5%. The surprise for market players was the reintroduction of a "bias easing." Governor Wheeler and company now believe that the return to their inflation target (2%) is likely to last longer than they were to anticipate. Previously, when the RBNZ loose monetary conditions in committee reported that they could achieve its inflation target at current rates (allowing for the NZD rally). Yesterday the RBNZ expressed new concerns on China and other emerging markets. the governor reiterated its preference for a further depreciation of the exchange rate, and acknowledged the impact of the fuel price drop.
dealers money market are now adjusting their Kiwi yield curves - some traders bring forward their expectations for the next rate cut from June to March, while others seem to reinforce their prices easing a little further the curve. also providing some pressure added to NZD in overnight trade is Fonterra cut this year milk price forecast NZ $ 4.15 / kg of NZ $ 4.60 / kg (with dairy products is their biggest export, the cooperative's New Zealand fixed world prices for dairy products), again citing an imbalance between demand and world supply.
Focus moves to the Bank of Japan (BoJ)
For many, the Fed has never been will be the main focus for this week, the Bank of Japan of its Friday announcement (BoJ) rate which should have more impact on the market. Currently the USD (¥ 118.85) trades relatively unchanged against the yen, as investors remain reluctant to attach too great a position before the decision (tomorrow) night.
With the speculator 'dove' believe that the BoJ will announce further easing at the meeting - amid the slow inflation and financial turmoil this year (Nikkei -10% in 2016) - the "large" dollar remains well supported on pullbacks.
Historically, PM Abe pays particular attention to exchange rates and equity prices as a measure of the success of the policy, its no wonder that the market was putting so much emphasis on this meeting. In reality, the BoJ's hands may be tied as governor Kuroda has limited ammunition. The market will be soon enough!
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