Here’s today’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the financial markets:
Main Trading Event Of The Day: USD FOMC Meeting Minutes @ 18.00 GMT
WHAT WE’RE WATCHING TODAY
Will Today’s FOMC Minutes Move The Markets?
The Fed is due to release minutes of its March 18-19 meeting today at which it reduced the monthly pace of bond buying by $10 billion to $55 billion. Whether they reveal anything new or just nuance, the minutes from the Fed’s last meeting will be a major highlight of the trading week. Traders are watching to see if the minutes take on a more hawkish tone, particularly after Fed Chair Janet Yellen said that the Fed could start raising short-term interest rates about six months after ending its bond-buying program, expected in the fall. The Fed dropped part of its statement that linked raising rates to an unemployment threshold of 6.5 percent. Unemployment was at 6.7 percent in March. FOMC minutes are known to move markets even when they really provide little new information.
The dollar was at $1.3708 per euro today after strengthening 0.3 percent last week to $1.3705. The yen added 0.2 percent to 103.08 per dollar, extending a 0.6 percent advance on April 4. It gained 0.2 percent to 141.30 per euro, following a 0.7 percent jump at the end of last week to 141.54. Stocks rose slightly Tuesday, with the Dow gaining 10 to 16,256 and the S&P 500 up 6 at 1,851. The Nasdaq rose 33 points or 0.8 percent, to 4,112.
FOMC Meeting Minutes @ 18.00 GMT
Dollar Down, Yen Up As BOJ Dampens Stimulus Hopes
The dollar hovered at three-week lows against major currencies today, having broken decisively lower as the yen squeezed higher and the euro gained a tailwind. The moves were sparked partly by yesterday’s comments from Bank of Japan Governor Haruhiko Kuroda who said there was no need for additional stimulus to escape years of debilitating deflation whilst adding that the world’s third-largest economy can ride out the impact of a sales tax rise. Recent remarks from European Central Bank officials have also suggested no urgency for any immediate policy action. The dollar fell more than 1 percent against the yen in its biggest one-day drop in over seven months to 101.55. It has since drifted back up to 101.91. The euro climbed as far as $1.3812, pulling further away from Friday’s trough of $1.3672. The dollar also slid on a raft of emerging market currencies where investors have been wagering massively on dollar strength that has not materialised, forcing a bailout of long positions. In contrast, the Japanese currency gained ground on the euro, the Australian dollar and many other currencies as well, as investors rushed to cover bearish positions.
China Commodity Demand Not Peaking
China’s economic deceleration has shaken commodity markets, however, according to the International Monetary Fund, its demand for commodities is a long way off peaking and does not mean that its rebalancing away from an investment-led economic model will lead to a decline in consumption of commodities. Observing growth trajectories in China, South Korea and Japan, the fund found that China’s per capita gross domestic product would need to double before that started to happen. Instead, the IMF points out that the composition of Chinese demand for commodities is likely to shift. As Beijing moves to shut down unprofitable steel factories, growth in demand for iron ore and copper should moderate. China is still importing iron ore at record levels but these imports are expected to grow at a slower pace from now on. Concerns over China demand partly explain why iron prices have fallen 12% since the start of 2014. By comparison, the fund said, Chinese demand for high-grade metals like aluminum is likely to prove more resilient in years ahead. The fund also anticipates other commodities will do well as incomes in China rise: high-protein foods and zinc. Losers could include rice, copper and eventually coal.
That sums up today’s highlights! We hope you have a profitable day on the markets.
