The EU Morning Report - FOMC Ended Asset-Purchased Program, Dollar Strength Across the Board - 30 October 2014


Currencies

  • The euro (EUR) crashed from 1.2770 to 1.2626 yesterday against the US dollar (USD) after the Federal Reserve officials ended the bond-purchase buying program after 5 years, as the labour market improved. Today the German monthly inflation rate will be announced and is expected to be at 0%.
  • The US dollar (USD) skyrocketed to 108.95 yesterday against the Japanese yen (JPY) as the US economy seems to recover faster, increasing the odds for a rise in interest rates next year. The greenback gained versus most major peers yesterday after the FOMC Statement announcement. Today the Japanese yearly inflation rate will be announced with expectations at 2.5% increase, along with the US quarterly Advanced GDP were its expected to be 3.1%.

Equities

  • Asian equities gained after Fed ended the bond-purchase program. The Japan 225 (NKI) advanced to 15707, the China 50 (CNX) climbed to 7224, the Hong Kong 50 (HSX) went to 23882 and the India 50 (IND) is currently trading near its all-time high at 8197.

Commodities

  • Soybeans (SOY) rose to two month high at 1044.13 USD cents per bushel as railroad traffic in US slowed delivery.

Mover & Shaker with forex options

  • Gold (XAU) fell to a three week low as the Fed officials were more hawkish than expected at the FOMC Statement. Investors are looking for more riskier assets rather than the safe haven.
  • Option traders may consider buying a Put on the XAUUSD and gain if the pair moves lower, while the risk is limited to the premium paid.

Written by Demetris Constantinou
Currency Strategist at easy-forex®