Weekly news highlight
The yen declined against the dollar, euro and British pound after the Chinese central bank ordered banks to set aside more money. Japan’s currency has declined this week as the Bank of Japan left its benchmark interest rate near zero percent, while Federal Reserve officials hinted at further rate increases.
Effect: USD/JPY eye on 116.00, the yen will keep falling against all majors next week as well as China’s yuan goes down against dollar. Yuan is considered to be a proxy currency for Yen due to the huge trade exchange Japan and China has between them.
The University of Michigan’s preliminary index of consumer sentiment increased to 82.4 this month from a final reading in May of 79.1. The measure has averaged 88.1 since monthly data were first compiled in 1978.The rebound in confidence may help stem a slowdown in consumer spending that’s forecast to pare economic growth this quarter. The survey also showed that Americans expect inflation will be less of a problem than they previously thought, which may help alleviate pressure on Federal Reserve policy makers to raise interest rates after this month’s meeting.  “It is encouraging that sentiment firmed up a bit after a plunge in May that was undoubtedly related to the spike in gasoline prices,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York.
Effect: Dollar possitive means more pressure on the feds to rise interest rate but until they do, it will go down against majors beside yen. EUR/USD and AUD/USD looks north this week. As well as against Gold One of another reason for gold to rise next week would be the Iran issue.
Iran has reduced cooperation with United Nations atomic agency inspectors since the announcement of a U.S.-backed offer of incentives tied to the shutdown of nuclear-fuel production, European Union diplomats said today. “Cooperation with the agency has been reduced to almost nothing,” said Francois-Xavier Deniau, the French ambassador to the UN’s International Atomic Energy Agency in Vienna. He was delivering a statement on behalf of the EU.Effect: This is a strong sign that capital investors will move their hedge fund behind gold once again due to Iran concern after it seemed that it has cooled down.
We will be posting more interesting news and analysis as the week progress. Thank you for being with eTalkForex.com