Featured # Markets | 3 years ago

USD and Global Markets Climb Awaiting Fed’s Decision

European and Asian markets rose on Monday, following the previous week’s gains due to the European Central Bank’s decision to implement additional stimulus. Meanwhile, the price of oil slipped again after the nation of Iran announced that they would not be agreeing to a deal that stipulates they halt their oil production.

Last Thursday the European Central Bank decided to lower interest rates, prolong its asset-purchase initiative, and make it less expensive for banks to take out loans. However, this week the market is monitoring the decisions that the Bank of Japan, the U.S. Federal Reserve, the Bank of England, and the Swiss National Bank will be making in the near future as their actions will affect investor’s movements.

European stocks declined Thursday after ECB President Mario Draghi declared that the central bank would not lower interest rates further, yet they rose on Friday with the market concentrating on the bank loan policies. Robert Noble, an analyst at RBC Europe, shared his views on how the banking sector will act, “We believe there is enough value in the sector for continued performance on central bank stimulus — with peripheral banks likely to lead the way.”

Looking to Asia, a major stock index in both Asia-Pacific without Japan, and within mainland Japan, rose on Monday. Meanwhile, the Bank of Japan commenced a two-day long policy assembly on Monday, as the central bank is predicted to maintain the negative interest rates they originally implemented at the end of January.

Moving to China, markets within the mainland were invigorated by a policymaker’s affirmation that it is too early to extract government bailout capital from the market. The same policymaker also made declarations that quelled investor’s anxieties of an overabundance of IPO’s.

In the United States, the Fed will conclude its meeting on Wednesday, and the central bank has stated that it still aims to increase interest rates steadily throughout the year, dependent on the health of the economy. According to statistics that surfaced recently, the rate of job creation surpassed prediction, yet the rate at which wages have grown continues to alarm some investors.

Josh O’Byrne, a currency strategist at Citi, spoke recently on what he predicts the Fed will announce this week and how it will affect Wall St., “The (Fed) meeting could see an acknowledgement of slightly improved conditions … the Fed wants to make sure these developments have taken hold before acting. Such a dovish message could see downward pressure on the dollar.”


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