It was reported on 18 February 2014 that the Japanese Yen had fallen further in trading against its rival currencies following statements from the Bank of Japan that it intended to expand its quantitative easing measures. After the remarks on the monetary easing, the Yen dropped to its lowest point this month against the US dollar, which itself is struggling to withstand the current dip in growth.
Readers are reminded that Japan`s central bank has instituted a massive stimulus program aimed at raising inflation and improving the economy. This policy is in line with the Abenomics plan named for Prime Minister Shinzo Abe who has set forth the goal of reversing the deflation that has depressed Japan`s economy for the past 15 years.
In their statement, the bank expressed that it will maintain its policy of lending and its willingness to expand it in the near future. Analysts note that this move has had a negative effect on the economy as was seen in Sunday`s report on GDP for the end of 2013.
Analysts expect to witness further devaluation of the Yen as investors are likely to sell off more of the currency in the coming days and weeks.
Hedge Fund Speculation Pushes Up Oil Prices
According to reports on 18 February 2014, prices at the West Texas Intermediate were on the rise as hedge funds placed bets that the new Keystone pipeline would have a significant effect on the supply levels at the central US energy stockpiles in Cushing Oklahoma.
Readers are reminded that Cushing is the location that holds the supplies of crude and other forms of the energy source that are traded on the WTI. With the introduction of the new pipeline that circumvents the delivery depots at Cushing, investors are nervously awaiting to see what influence it will have on the supply levels there. The Keystone pipeline is intended to bring oil supplies down from the major production points in Canada down to the Gulf Coast in the southern United States.
Analysts also note that an expected increase in demand from China that comes with recent statements from the central bank there over its intention to increase lending will likely improve demand levels considerably, thus driving up prices. Additionally, the cold spate that has struck the United States in recent weeks is reported to have depleted much of the supplies for heating fuels.
Traders are advised to watch for further rises in trading for crude as demand increases and supply levels are drawn into question.
Demand for Gold Rises on Perceived Drop in US Growth
Continuing its return to prominence, gold prices had a strong showing on 18 February 2014 as hedge funds increased their positions on the precious metal. According to the reports, gold rose to a three month high as investors were put off on the USD, and sought out haven assets as an alternative. Readers are reminded that 2013 was the worst year on record since 1981 for gold trading as the dollar rebounded from the recession.
Recent reports have pointed to a potential slowdown in the growth of the US economy over the past two months, spooking some investors who had previously shown increased confidence with the start of the tapering measures by the Federal Reserve on the stimulus package. The drop in productivity in the manufacturing sector and the decrease in the monthly addition of jobs to the workforce has lowered demand for the American currency.
Analysts are skeptical regarding this recent rise in gold prices, foreseeing a return to growth in the US with the last jobs report showing an increase after the dip in December 2013. As such traders are advised to watch for volatility in the gold market.