The IMF revised its forecast for the US economy, thereby decreasing it. Apparently, this came as a surprise for most market participants. Still, this doesn't automatically mean that the Fed is going to keep interest rates ultra-low longer than expected.
In particular, the GDP forecast was diminished down to 2,0% in 2014. The previous forecast used to be 2,8% in 2014. The IMF recommends that the Fed should leave the key interest rate at a record-low range longer than expected.
Some experts disagree with that. Yesterday's economic reports, including industrial production (+0,6% in May) and HPI (49 in June), show that the indices gained more than expected. Such strong data hint that the US economy may accelerate its growth up to 3,0% this year. In particular, this idea is shared by RBA strategists.
Other experts believe that the IMF forecast make markets more nervous by expecting economic slowdown in the USA amid stronger-than-expected growth. The Fed will definitely have a hard time curbing interest rates after mid 2015 after strong industrial output and higher employment figures.
At the same time, according to June's survey conducted y Reuters, most big-scale bond issuers from Wall Street expect the Fed to start raising interest rates in the second part of 2015.
By the way, today the Fed starts a 2-day meeting. Experts assume that the central bank is going to cut the bond purchase program by $10bn more to make it just $35bn a month.
At the same time, despite yesterday's strong data, the US Dollar dropped 0,2% against the Japanese Yen and the common European currency. Dollar-denominated assets are expected to generate less substantial yields in the near future, thereby making investors seek riskier assets for bigger profits.
Gold prices gained a little bit on Monday amid a stronger US stock market. Yesterday, gold set a new local high at 1285,10, which was followed by a drop by 0,82% to 1265,00 today. Brent oil futures devalued from 107,68 down to 106,90 yesterday, which was followed by a 0,66% drop today.
US stock indices showed low volatility yesterday coupled with low liquidity. Dow Jones closed 0,03% higher at 16781,01, Nasdaq gained 0,24% to touch 4321,11, S&P500 increased by 0,08% up to 1937,78.
USD Index
According to Masterforex-V Academy, the USD index (shows the USD value against a basket of 6 other major currencies)is still consolidating within the scope of the 80,40-80,56 range while deciding on the direction of the near-term momentum.
The H1 chart can show us the price going down form the top of the range within the scope of a mid-term downtrend. The price is moving within the scope of the descending MF sloping channel (red dashed sloping line).
A further drop is likely. The level of support to watch is 80,40. A break below it will give way to 80,30 and 80,24. The move is mared red.
Alternatively, a rally is likely to take place if the price breaks and consolidates above the top of the range, which will give way to 80,67. This will also question the further prospects of the current mid-term downtrend.
The Binary Option Department of Masterforex-V Academy recommends going short ( buying put options) when the price goes back to resistance levels. The lifetime of the option is under 2 hours. When the price comes close to a level of support , it is necessary to watch the trade as a rebound is likely to take place.
