The market is waiting now for the Fed's interest rate decision which is widely expected to be unchanged from 0% to 25% again with no mentioning of a close end of the Fed's quantitive easing policy steps which can be extended as long as the fed is still downplaying the inflation upside risks over the long term caring of the labor market and the stability of the housing market and god willing the market will be closely watched the Fed's president press conference after the Fed's meeting for the first time today to know more about the Fed's current evaluation of the economic performance and the inflation pressure and to how long this quantitive easing policy can be held which caused greenback weakness pushing up the energy and commodities prices on this low interest rate in US which is encouraging the investment and from another side lowering the greenback to produce inflation pressure globally to force the ECB to hike the interest rate for fighting this inflation and to lead PBOC to ask the Chinese banks 10 times since the beginning of 2010 to raise its reserves liquidity and to raise the interest rate 3 times since the last charismas for containing the inflation pressure which some of it has come from the tension in the middle east and specially labia and some other has resulted from this current Fed's adopted quantitive easing policy which drove the prices of the commodities and energy up while it is till looking to the fed that it is too soon to end this policy as what has been said a week ago by the Fed's Vice president Yellen which came inline with the recent statements of Bernenke which downplayed the risks of rising the energy prices over the long term referring to that the rising of the oil and commodities prices can be temporary and this direction has been obvious in the recent meeting minutes of the Fed too with no signal for hiking the interest rate until now and this direction can be maintained as we have seen no implication to be mentioned on US ISM manufacturing index which has come at 61.2 which the market waiting for just 60.5 from 61.4 showing no easing of the demand in the sector despite the rising of the commodities and oil prices which can give the conclusion that the easing period can be extended undermining the greenback having more rooms for prices to grow up with no tightening action to be taken against them which can underpin the demand for the precious metal like the gold and the Silver as a hedge against inflation.
Kind Regards
FX Market Strategist
Walid Salah El Din
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