Binary Options News : June 20, 2013
The highly anticipated end of the two Federal Reserve meeting, culminated in Federal Reserve hinting it could start winding down its asset purchase program by the end of this year with a possible total cessation of the $85 billion a month monetary easing policy by the end of 2014, all of which dependent on the improved economic conditions Fed Chairman Ben Bernanke predicted for 2013 and 2014, pointing towards a better economic outlook, with quarterly growth expected to be around 2.6% and unemployment to settle around the 6.5% level. Bernanke was adamant that the record low range of interest rates – 0 to 0.25% would be maintained until the unemployment rate, currently at 7.6% would fall to 6.55
US stocks fell strongly in the US trading session as investors digested a possible scaling back of the stimulus measures with the USD making gains on the news. helping sink stocks into the Asian trading session was China’s manufacturing activity weakening further in June, falling to a new nine month low. The HSBC Purchasing Managers’ Index (PMI) fell to 48.3 in June, down from May’s reading of 49.2. Readings below 50 indicate an economy in contraction and follows on from last weeks World Bank lowering its 2013 growth forecast for China from 8.4% to 7.7%
Asian markets reacted to the Fed policy statements and the Chinese PMI with large falls in its stocks markets. Hong Kong’s Hang Seng dropped 2.10% and the Chinese Shanghai Composite fell 1.21%. The news also hit China’s largest trading partner – Australia – with Australia’s S&P/ASX 200 down 1.31%. Japan’s Nikkei 225 was 1.59% lower despite the USD/JPY trading higher.
The USD made gains in overnight Asian markets against most of major currency rivals as Bernanke hinted towards the end of the asset purchase program valued at $85 billion a month. The EUR/USD was down 0.21%, the GBP/USD was down 0.18% whilst the USD/JPY was up 0.58%. There were also gains against the commodity linked cousins of the AUD – up 0.48% and the CAD – up 0.24%
The commodity markets saw large falls as the Fed moved towards ending the stimulus programs by next year.The strengthened USD ensured many investors stayed away from the precious metals with Gold – the traditional inflationary hedge down 2.22% and Silver falling 2.59%. Profit taking in Crude Oil meant prices fell 1.74% in Asian trading with Natural Gas falling 0.42%
German and French manufacturing PMI figure stake centre stage this morning when European markets open, although it will be the digesting of the Fed news which is expected to fuel trading and high volatility today, ahead of key jobless figures released in the US later today.
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