Fed remains extremely cautious

USD  was trading cautiously during the Asian session after yesterday’s pressure upon publication of the report from the last Fed’s meeting in September that increased the doubts that the central bank will raise rates this year.
Yesterday it became clear that Fed is extremely cautious and postponed the long awaited interest rate hikes to make sure that global economic downturn would not affect the US recovery. EUR /USD hit a three-week peak of 1.1328, and today is at 1.1285. USD/JPY  is at 119.90 and remains within the well known from the last weeks range between 119 and 121. The most profitable currencies are on track to hit new highs. The Australian dollar approached the peak from September at 0.7280. A breakthrough this level would lead to the highest levels since the end of August. The New Zealand dollar approached the peak from August at 0.6708. NZD’s rally after the bottom on 23 September at 0.6235 so far is amounted to 7%.

Fed caution led to gains on Wall Street and generally in risky assets. The data from Europe is not good and it became clear German exports collapsed in August, with the greatest pace since the global financial crisis. Today there are no major macroeconomic news that could move the market.

Reserve Bank of Australia left the cash rate unchanged at 2%

It happened what was expected. Reserve Bank of Australia left the cash rate unchanged at 2% on the meeting today.

The institution pointed the weakening of some economies, and in particular - China, which is a major trading partner, but adding that although the increase in the gross domestic product of Australia is below long-term averages, it is accompanied by stronger employment growth and stable levels of unemployment.

Overall, the economy is likely to be operatingwith a degree of spare capacity for some time yet, with domestic inflationarypressures contained. Inflation is thus forecast to remain consistent with thetarget over the next one to two years, even with a lower exchange rate.
The purpose of the regulator is facilitated by the depreciation of the local currency, the Australian dollar fell by nearly 9% in the third quarter. This movement is balancing the lower prices of key export commodities.Markets, however, still believe there is a 30% chance for a new reduction of interest rates in November, the decision will most likely be affected by the slowdown of the Chinese expansion.

The data on the trade balance, published today, is highlighting the problems of the export sector. The deficit increased to 3.10 billion AUD in August compared to the revised to 2.79 billion previous month. Exports registered zero change, while imports increased by 1%.

World markets lost $ 11 trillion in the third quarter

Most of the stock markets in the world ended the third quarter of this year in the red. The aggregate capitalization fell by $11 trillion due to many factors - from the economic slowdown in China to the expectation of US interest rates rise.

Raw materials quarter proved to be the worst since 2008 and this naturally affected the commodity currencies. Will there be new shocks when finally the US central bank increase the interest rates?

Yet there are exceptions. Leader in growth became Latvian stock index OMX Nasdaq Riga which in September jumped by 30% after weak variations in the previous two months.

In USA the decline in the stock market reached the maximum for the last four years.

From July to September Standard & Poor's 500 has dropped by 6.9% and the Dow Jones Industrial Average - by 7,6%.

For the same period the Western European stock markets lost 8.8% (Stoxx Europe 600 index), which was also the largest shares decline from 2011 onwards.

In Asia as a whole was noted even bigger decrease this quarter - MSCI Asia Pacific fell by 15%. And in Shanghai, Singapore and Jakarta the collapse was greater than the peak of the crisis in 2008. The worst result among 90 indexes showed China's Shanghai Composite has collapsed by 29%.

Inflation in Russia in 2015 will reach 12.2%

The inflation in Russia in 2015 will be 12.2% and in 2016 - 6.8 percent. This was announced yesterday  by Minister of Economic Development Alexei Ulyukayev during the International Investment Forum in Sochi.

"We are ready with the new socio-economic forecasts and on Monday will present them to the government," announced Ulyukayev. 

According to the evaluation of the Ministry of Economic Development in August inflation was 0.4%, which exceeds twice last year's indicator. The 12-month inflation in August reached 15.8% (in July - 15.6%) and continues to increase.

The  Finance Minister Anton Siluanov  expects inflation in Russia in 2016 to be in the range of 6-7% .

According to Merkel, the crisis can not be solved without Russia

The end of the crisis in Syria can only come with the help of Russia, said German Chancellor Angela Merkel, days after Russia launched air strikes against terrorists in the Arab country.

Speaking of the refugee crisis, Merkel said that the problem must be solved, and the people must return to their homes.

 "That's particularly true of Syria, where we have all known for years that there can only be a solution with Russian and not without Russia," Merkel said at speech in eastern Germany to mark the upcoming 25th anniversary of German reunification.

The United States  have a different opinion, the White House has already stated that Russia's military actions in Syria risked prolonging the conflict in Syria.

Turkey, USA, Germany, Britain, France, Qatar and Saudi Arabia urged Russia to cease the military air operation in Syria.

Will these actions lead to further escalation and strengthen the extremism and radicalization in the region???

The dollar rose after the data on private sector employment

On Wednesday the US dollar marked an increase following the report on US Private-sector employment data. Meanwhile  the euro fell as a result of negative data on consumer prices in the Eurozone. 

In September the US private sector created 200,000 new jobs. Analysts predicted number to be around 192,000. This data suggest that the Federal Reserve may raise interest rates until the end of the year. 

Following the publication of information on employment, the dollar index rose 0.45 %. The US currency rose 0.10% against the Japanese yen to almost 120. The dollar marked an increase and against the Swiss franc and British pound.

Data released for consumer prices in the euro area showed a decrease of 0.1% yoy, which is far from the ECB target inflation of 2%. As a result, the euro fell 0.6 % to $ 1.1180 and 0.5% to 0.7380 against the British pound. This fueled speculation that the ECB may extend quantitative easing program at a time when the Fed is preparing to raise interest rates.

According investors report on employment in non-agricultural sector, which will be released on Friday will determine whether the Fed will raise interest rates and give direction to the dollar.

Gold suffered the worst quarter in a year

Gold reached its lowest level in two weeks and recorded  worst quarter of the last year.
The report on US Private-sector employment that was released yesterday  turned out to be better than the market expectations. This additionally sparked further speculation that Fed is ready to act to end the year.

From July to now the gold lost almost 5% of its value and the last quarter was the fifth consecutive ending with a loss. This is the longest series of decline since 1997. The spot price of the precious metal fell by 1% to $ 1115 per troy ounce, while futures for delivery in December fell $ 11 to $ 1115.20.

The platinum continue with the depreciation and is heading to the biggest quarterly decline since 2008. This was prompted by concerns about decline in demand for diesel cars after the scandal with Volkswagen. The metal fell by 1% to $904.75 per troy ounce and has lost almost 16% in the  last quarter.

Palladium fell 0.5%t  to $650.75 and ended the quarter with almost 3% loss. This is the third consecutive quarter of decline for the metal.

Silver fell 0.6% to 14.52 per troy ounce and ended the quarter with almost 8% loss.