The Dollar Gains Ground Ahead of the Fed Decision
The dollar continued to consolidate ahead of the Fed meeting which will culminate with a Press Conference held by current Chairman Ben Bernanke. This will be Bernanke’s last press conference as the Chair of the Federal Reserve assuming Yellen is confirmed early in 2014. Solid European data failed to lift the Euro and Pound.
Investor’s surveys continue to point to an acceleration of German growth. German investor confidence is at the highest level in more than seven years. The assessment of the current condition within the Zew survey rose to 32.4 from 28.7 and the expectations component rose to 62.0 from 54.6.
In the US, the Budget deal looks to have the votes in the Senate. The budget agreement that the House has overwhelmingly passed appears to have the necessary support to withstand a filibuster attempt in the Senate.
The UK reported a slightly softer inflation figure and saw sterling slip a bit lower on the news. November CPI rose 0.1% for a 2.1% year over year pace, down from 2.2%. It is the lowest since 2009. Producer prices were also soft. As the UK economy strengthened this year, price pressures eased.
The RBA minutes did not shed any new light and was not specific as Governor Stevens has been subsequently. The door is left open for a future rate cuts. Stevens’ testimony before the House tomorrow will provide another opportunity to talk the Aussie down.
Sterling moved lower against the greenback as momentum turned negative. The MACD generated a sell signal were the spread (the 12-day moving average minus the 26-day moving average) crossed below the 9-day moving average of the spread. The index moved from positive to negative territory confirming the sell signal. The RSI is printing near 50 which is in the middle of the neutral range.
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