Tuesday 21 May 2013

GFX Afternoon Update May 21 2013


Good Afternoon 

The US Dollar strengthened against the Canadian Dollar in anticipation of tomorrow's release of the FOMC minutes. These will indicate how the committee feels about quantitative easing with speculation that quantitative easing will be reduced. A reduction in quantitative easing will strengthen the US Dollar which had strengthened in anticipation of a reduction in easing. The US Dollar could not maintain this level as the Dollar weakened and returned to the range that started the day.

The EUR.USD has shot out of the range it was trading in and reached highs because of weakness in the US Dollar.

The Yen has stopped weakening against the dollar after its largest gain in three weeks. This comes after comments from the Japanese Economic Minister that more weakness from the Yen could "hurt peoples lives". It appears that the Bank of Japan wants the value of the Yen to remain at its current levels and prevent weakening to 110. These comments indicate the Bank of Japan is trying to control the devaluation of the Yen and initiate controlled inflation. 

Tomorrow will see the release of some reports that are significant enough to affect the currency markets. Canada will release the retail sales numbers while the United States will release home sales, and the minutes from the FOMC meeting. These reports should affect the markets and we should see some volatility tomorrow. 

Yonah

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