According to several analysts, including those working for the Fed, the US economic growth may reach 2% in 2014 without new financial injections. The 2% prediction is below the FOMC’s expectations – 3,1%.
In this aspect, natural questions arise: How will the US Dollar behave in the near future? What currencies are better to invest in? Or maybe gold looks better as an asset? Let’s try to ponder on these questions together with Masterforex-V Academy…
Economists On US Economic Growth
According to Eugene Olkhovsky, Masterforex-V Academy’s leading expert in financial markets from Canada, economists are almost sure that the US economy gained 2% in Q3 2013 as compared to 2,5% seen in Q2 2013.
On November 7th, the US Department of Trade is set to release the preliminary report for Q3 2013. Some members of the Fed are promoting the tapering of QE3. They are convinced that spending $85bn a month on bond purchases is inefficient.
According to the average economic forecast, the recent temporary government shutdown resulted in a 0.3% decline in Q3 2013. Still they say the result form the shutdown will be temporary.
At the same time, some of them assume that the Fed’s further bond purchases will not support the US economic growth. The ability to stimulate the economy through increasing the balance is undefined. Therefore, they warn of a possible inflation hike due to excessive loans to the US bank.
Still, some of the FOMC members are sure that the Fed is going to continue the accommodative policy. At the same time, the terms of the tapering is kept secret. The only thing we know is that the Fed is very likely to avoid the tapering in the near future since the members are willing to reach all the goals.
During the previous month, the trade balance deficit dropped down to 678 million dollars as compared to August figures (727 million dollars). Still, the figures were higher than expected (600 million dollars). The export grew almost by 1%. At the same time, the import declined by 1%. At the same time, the central bank left interest rates unchanged at 2.5%. Some experts say that, the weakening of the national currency is necessary to reach a balanced increase.
As far as currencies are concerned, there are several predictions for the US Dollar. It should be reminded that not so long ago, the Euro currency hit its lows versus the US Dollar around 1.3753.
At this point, EURUSD is trading around 1.3509. The chart below, courtesy of Masterforex-V Academy, confirms that:
At the same time, the Japanese Yen is down against the US Dollar as well and USDJPY is trading around 98.39. The previous trading session showed 98.18.
Gold Futures Show Some Growth
Gold futures are growing in price. A couple of days ago, a stronger dollar made gold go down to the 3-week low. The price of the gold futures for December delivery gained $5.5 or 0,4%, thereby reaching 21,68 per troy ounce. A day before, the futures touched a minor level. The chart below, courtesy of Masterforex-V Academy, reflects the current state of affairs in the market of gold futures:
The September report on US employment is coming out on Friday .it is about to have a major impact on gold futures behavior.
Japanese Bond Market Seems Dead
According to Japanese analysts, the trading volume in the market of Japanese bonds declined down to $385bn during the previous quarter. This is the lowest level since 2004. At this point, the Bank of Japan is the only player supporting the Japanese bond market. The reason is the low yields of the Japanese bonds. It comes as the result of the lack of budget restructuring amid financial issues in the country.
Politicians are sure that they still can lend without consequences. The IMF reports that the Japanese authorities cannot find the way to consolidate finances.
At this point, the BOJ seems to be focused on how to decrease the real interest rates and how to hit the inflation targets, even if it is necessary to sacrifice liquidity and trading volume when it comes to bond selling.
British Pound Strengthens
In September, the UK’s industrial output increased more than expected. The figures were up by 0,9% since August when it was down by 1.1%. The analysts had expected a 0.6% increase. The British economy seems to be shooing consistent results.
