According to the issued protocol of the FOMC meeting at June 19th the participants of the meeting decided to leave the credit and monetary policy without any changes. At the same time they implied the possibility of taking certain actions in case of the economic recovery pace will be worse than forecasted. In their opinion the recovery pace is moderate though some economic indicators signaled that it is slower than anticipated.
The majority of the participants of the FOMC meeting agreed that the growth of the aggregate demand, manufacturing and employment in the coming quarters would be slower than one suggested by April forecasts. Some members of the committee expressed an opinion that the incremental measures for stimulating should be undertaken in order to provide satisfactory rate of employment growth as inflation is in the boundaries of the FOMC goals. Others stated that additional measures would be justified if the economic situation deteriorated. Thus in light of this there’s no point to expect QE-3 and it has disappointed the markets a lot.
Yesterday the Euro depreciated from 1.2296 to 1.2212. Analysts worldwide mark that the measures to consolidate the budget in Spain don’t suggest any optimism and the aid to banks of 100 billion Euro will be temporary. The sad thing is that the funds will be insufficient and the Spanish banks will need and additional support while the economic situation will get worse. Besides the officials don’t deal with solving of the long term problems what gives reasons to expect the remaining pressure on the Euro. So the currency in the coming 6 months has chances to test the Support around 1.1500. Perhaps the probability of this scenario is quite high though the correctional growth to 1.2450 is also possible.
The Pound depreciated against the US Dollar from 1.5577 to 1.5485 with subsequent recoil to 1.5500 yesterday. The general picture of the British currency trend remains negative. If the level of 1.5470 doesn’t withhold again and shifts from support to resistance, the pressure of sales on the Pound will exacerbate. And that in turn will most likely lead to the motion towards 1.5360 and even lower.