As the Feds reinforced yesterday the keeping the monetary policy soft for the next few months, the dollar witnessed a sharp fall reaching the lowest in three years against, while commodities were driven higher.
Oil climbed to a two-and-a-half hears high $113.68 a barrel despite the sharp rise in crude stockpiles yesterday, while gold rose to a new record high at $1534.35 per ounce dragging the Aussie to a new record territory at 1.0946.
The Feds left the benchmark unchanged between 0.0% and 0.25% yet decided not to prolong the bond-buying program that will end in June. Meanwhile, they expressed no worries about inflation, as the surge in oil could be transitory.
This fueled believes that borrowing costs will be kept low for an “extended period” as the economy enjoys a stable economic recovery, improving investors’ confidence and appetite for risk.
Those developments brought volatility within the broad markets, as the euro and the GBP enjoyed a huge surge despite the lackluster data released from Germany. The euro hit today the high of 1.4881 while the pound hit the high of 1.6745.
Yesterday, stock markets enjoyed positive results later in the day as some companies reported better than expected earnings, which may signal global recovery is accelerating. Asian markets gained today suggesting equities may continue their positive run.
It will be a light day of data today from Europe and the UK, but the US will issue its advance GDP numbers along with the pending home sales, yet markets will continue to move within the effects from the Feds statement and Bernanke’s speech.
Originally posted here
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