US Fed Minutes show signs of caution.

The release of the US Fed’s latest policy minutes showed that most committee members remained cautious about a rate hike in coming months with concerns about how the Greek financial crisis will impact global financial markets and how China’s recent share market plunge will also impact the US economy. 

Keep in mind that these minutes were from a meeting prior to the current Greek crisis and were well before the daily stock market plunges of the past few days in China. Many traders are now pushing back their estimates from September to December for when the US Fed will raise its official cash rate and the US Dollar did experience some selling pressure on the back of the minutes.

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US Fed statement drives the US Dollar lower and stocks higher.

They removed the word “patient” from their statement however it wasn’t the wording in the statement that drove traders to abandon the US Dollar and jump into US stocks on Wednesday. It was the Fed’s adjustment of its expectations for the US economy when it comes to inflation, growth and interest rates.

Traders on Wednesday assumed the US Fed would raise rates later in the year rather than sooner however Janet Yellen really didn’t give a firm indication either way. She simply said the Fed had removed the word “patient” from its statement but said the Fed could make a decision any month to raise interest rates. She’s certainly frustrating the market with her Dovish but yet slightly Hawkish comments.

Clearly the US Fed doesn't see the economy strong enough just yet but it is ensuring the market knows that if the data does rebound strongly, inflation lifts and job creation continues it could act at any time. One part of the statement that was also responsible for the US Dollar diving on Wednesday was the fact that US Fed lowered its forecast of where the official cash rate will be in December this year. It lowered its forecast by 0.50%.

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Stock markets surge on US Fed rate suggestion.

The US stock market had its biggest one-day gain for 2014 as the Santa Rally returned in full force. The Dow Jones rose 2.43% or 421 points only needing to rise another 187 points to finish the year on a new high. Thursday was a classic risk on trading session as traders dumped the safe haven currencies of the Yen and Swiss Franc and piled back into the US Dollar and Pound. The US economy got another piece of positive economic news overnight with weekly jobless claims falling by 6,000 to 289,000.  

Andrew Barnett is Co-Founder of LTG GoldRock, a boutique financial education and investing company located on the Sunshine Coast, QLd Australia.

The AUD finally breaks to a new low.

The Australian Dollar has finally broken to a new low Wednesday thanks to the price of Iron Ore which dropped to its lowest level in 5 years. Today at 11.30am Sydney time we will get the latest official unemployment report which if weaker than expected will only add more selling pressure to the AUD.

The US Dollar also gained again after a private ADP employment report survey beat market estimates with 230,000 jobs being created in the month of October.  Don't forget to catch the full Forex Fundamental News in the LTG GoldRock Insider Report go to www.ltggoldrock.com for more info.