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Forex Flash: Aside from Yen, USD´s fate dependent on Fed intentions - DBS Group

FXstreet.com (Barcelona) - DBS Group analysts believe that apart from the Japanese yen, the fate of the US dollar also depends on expectations over the Fed’s intentions on asset purchases this year.

They comment that at its last monetary policy meeting on May 1, the Federal Reserve inserted a new line, “to increase or reduce the pace of its purchases” into its FOMC statement. Put simply, they feel that USD tends to be strong when US jobs data surprises on the upside and fan expectations for the Fed to taper asset purchases. On the other hand, they note that USD was soft last month when Fed officials warned that they may have to increase asset purchases if inflation keeps falling “well below” its 2% inflation target. They write, “Tonight, the US will release both CPI inflation and jobless claims data. If both disappoints on the downside,the USD could return some of the past week’s gains.”

Asian equity markets give mixed results Thursday amidst plunging commodities

Asian equities gave checkered results Thursday, with Chinese stocks outperforming Japanese ones by a considerable margin. The big story of the overnight session was the robust performance of the Japanese economy in Q1, as GDP Annualized grew 3.5%, beating expectations of +2.8%. Moreover, GDP (QoQ) climbed +0.9%, exceeding projections that called for only +0.7%.
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Commodities Brief – Precious metals inking fresh intraday lows, silver precariously close to 22.05 critical support

Gold extended the downside move Thursday, to breaking the 50% Fibonacci level at 1405.00, which hastened the move towards the 61.8% around 1385.00. The price initially tried to attempt to correct some of the losses, as the RSI dipped within oversold territory, however has proven to be unsuccessful. The price of gold is trading at intraday lows, operating at USD $1371.62 per oz. in these moments. Should any bounce and retest occur towards the 1405.00 mark, this could effectively provide another short opportunity, as the downside pressure remains absolute moving forward.
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