Forex Trading Market Update For November 20, 2013
GBP/USD currently trading at 1.6126, GBP/EUR is at 1.1904 (as listed at binary options broker, Binary International), so GBP/EUR slightly lower than where it was than where it was this time on Monday. The Euro resurgent after a slip off last week, with the United States dollar continuing to weaken over the course of the past two or three days, with people once again betting that we will not see a reduction of Fed stimulus at the December meeting, which is just under a month's time.
The key thing about the United States dollar at the moment is that we've seen a lot of speakers come out of the Federal Reserve, obviously Janet Yellen had a confirmation hearing on Monday, Bill Dudley, the New York Fed Chairman came out and was slightly more dovish about the situation in the United States than most people had originally thought. Bill Dudley did talk about how growth was strong in the United States, but didn't caveat that by saying that it may point to a reduction in assets purchases anytime soon. Therefore, it is natural to believe that people who are pricing in some form of cuts in assets purchases and reduction in quantitative easing at the December meeting has lessened somewhat and therefore the United States dollar is on the back foot as well.
Furthermore, this has also helped push equities markets to new nominal all-time highs. You know that big figures do matter, as we saw the S&P at 1,800 for the first time ever, we saw the Dow Jones at 16,000 for the first time ever. Does that mean that the United States economy and the world economy are firing at unprecedented levels? No. Does this mean that people are betting on more QE coming to the United States? Yes. This is exactly why the equities markets are moving forward so much and the United States dollar is losing ground as well, especially against the Chinese yen.
Quite a data day on Monday and we expect a quiet today as well. The main news overnight was the Reserve Bank of Australia being slightly happier about the state of the Australian economy, saying that obviously the Aussie dollar still remains too high, remains overvalued, but we're starting to see forward looking indicators improve a little. They are looking for growth to remain at about 2.5% over the course of next year, which is actually towards the low side of where they have been obviously over the course of the crisis, but they are looking at that as a function of weak Chinese demands, poor mining output, low aggregate demand as well and that strong Australian dollar. We've just seen the Australian dollar moved a little bit higher as those minutes were released overnight.
Speaking of minutes, we've got minutes from the Bank of England on Wednesday, nothing really from the Sterling today and most of that have already been said at the quarterly inflation report we had last week, but it will interesting to see that the voting record or just how consensual that decision to move the timeline of when the UK economy will hit that 7% threshold from Q2 of 2016 to Q3 of 2015. We also have the Fed meeting on Wednesday as well, which is from the October meeting where there was no chance of any reduction in stimulus and we'll just start to see whether people are starting to caveat a decrease in assets purchases in the United States.
Data wise today, German ZEW, we're looking for it to disappoint, given the falloff in export revenues that we've seen for the German economy of late, but in the meantime it should be a fairly quiet day. Gold trading remains range bound this morning.