FX.co ★ Fundamental Analysis, January, 26 / 2012

The announcement of the Federal Reserve monetary policy data has brought a few surprises during the first game of the year.

Although there will be no change in interest rates, there is no need to postpone any decision to stay very close to zero from mid 2013 until 2014.

The situation undergoes changes in terms of controlled inflation, even after some last year’s money infusions and so-called "Operation Twist", as well as and the creation of jobs indicating the slight but slow improvements.

The first conclusion is that the Fed for many years has not been seeing the signs of economic recovery and with the measures announced today left the possibility of a new stimulus for the economy by injecting money (QE).

This fact can be observes as well in the Fed’s report concerning its forecasts of economic growth for this year defined in the range from 2.2 to 2.5%. For the next year the growth is expected to be between 2.8 and 3.2%.

The announcement was followed by the overall decrease of the dollar. Once again the US dollar lost its advantages as an investment currency and as a hope for investors.

In this regard, we believe that the dollar acting in this way provides the greater freedom for the various activities against it. In other words, regardless the negative news from Europe, the euro exchange rate could be affected without being influenced by other currencies.

Of course, the NYSE shares closed with a good profit and continued its growth till the end of the day. The Dow Jones reached its highest level since July 2011.

The ounce of gold has also "flew" after the Fed’s announcement and by the end of American session in a couple of hours collected more than $ 60 in quotes.

As for the currencies, the dollar was the one that stood in the breach. Almost immediately the euro has broken the area of ​​1.31, completing 190 points between the daily minimum and maximum. The pound and Swiss franc followed the same tendency.

From the European point of view, there is nothing new. The same speeches, twists, elapsed time, Greece which is expected to set out the side and the debt, or bankruptcy, out of the euro and return to the drachma. Following the IMF, the European Central Bank, banks and European finance committees are playing with fire.

The European session on Thursday reflects what has happened the night before. The DAX 30, CAC 40 and FTSE 100 shares were very successful. The first brought the index to its highest level in the end of July, with a slight profit taking during the last few minutes, but remaining the bullish trend.

Of course the European currencies rose significantly, although the price curves across the EUR / USD, GBP / USD and USD / CHF pairs indicate the possible trend exhaustion.

The agenda includes information required in the weekly Thursday durable goods orders and jobless rates at 8:30 ET. At 10:00 the new turn of home sales will take place.