The week is coming to a close. In Australia and Asia many markets are already closed. Friday has provided some interesting moves for the forex market if forex news is any indication. The top headlines for Friday out of Singapore and England state the yen is firmer after Japanese officials make remarks about corporate taxes. The dollar index is still flat and USD rates hold off on full gains with looming decisions. The BOE president spoke with a favourable response in the GBP.
Forex News Explanation of Headlines
The GBP increased Friday after Bank of England’s Mark Carney spoke. He was quoted to say that more bond buying by the bank is unnecessary. The British economy is in recovery. These words helped to improve investor outlook for Britain. Carney did say if the recovery process did falter then more stimulus would be sought, but for now he does not see the need. Recovery is clear and quantitative easing is no longer required. The sterling increased .4 per cent after his forex news statement.
The Bank of Tokyo’s Mizuho had a different feeling about Carney’s statements. Mizuho feels Carney is more dovish, which makes a clear gap between his statements and what will truly happen later on. For the moment positive statements and reports are rolling out of the U.K. It has further sparked interest from investors to see if interest rates will be increased now that the economy is in recovery.
The GBP/USD certainly saw the GBP gain on Friday. There is a lot of reason for the USD to falter against the GBP. It is not just the forex news from Carney, but also the issue of political uncertainty. The Federal Reserve is still not confirming an exact time for quantitative easing to end. The debt-ceiling issues in which the government could hit a standstill are also an issue. Thursday data and news was definitely confusing from the Fed, which has created an issue with USD gains.
Most investors are waiting to see what happens on Monday October 1, 2013 and in December. These are two important times for the central bank. Plenty of investors believe the easing will be in place through early 2014. The fact that politicians are still fighting over debt-ceiling issues have made the market more wary. Forex news was alive with discord after the president likened the Republicans demands to stop spending to terrorist demands.
Forex News on USD Helped Yen Increase
The yen increased like the GBP for several reasons and many having to do with the USA political firestorm. Japan’s MOF Taro Aso stated that the corporate tax rate is not going to be lowered right now. The rate cuts were meant to happen with stimulus cutbacks, but the dollar gave another boost to the yen instead due to the issues. The MOF does need to help re-inflate the economy. How this will happen is dependent on the stimulus and growth reforms Japan is looking at. Aso is most likely going to make a decision after October 1st, which is after Obama Care is enacted and the fiscal discord should come to a close.