Fed’s Decision On Target

The U.S. dollar is still moving laterally against major currencies and a strong breakout from current levels would possibly mark the trend for the next months. Rates should remain unchanged in the U.S., but quantitative easing is still in the cards.
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U.S.: quantitative easing will be implemented?The U.S. dollar is still looking for the line of least resistance, albeit important support levels against the Euro and the British Pound will be met this week. In reality, a strong breakout from current prices would possibly mark the trend for the next months, while the Federal Reserve is meeting this week in Washington D.C. Rates should remain very accommodative, CPI core rates printed 1.8% in May from 1.9% in April, but quantitative easing remains a possibility. In effect, after having bottomed at the beginning of 2009, interest rates yields have increased consistently. The short/medium term trend is bullish over the medium/long term. In fact, the financial markets might already anticipate the next scenario which will be characterized by higher raw material prices. In May, the Conference Board’s Index, which forecasts the possible performance of the U.S. economy over 3/6 months period, increased 1.2 % (1.0% expected) month-on-month from April’s 1.1%.