Fed has voted: NO to the Rate Hike

Wednesday came with a good news for the UK, the ONS (Office for National Statistics) stating that wager growth rate rose to a 6-year height and the unemployment descended in Q2 (second quarter of the year). A 2.9% annualized rate was registered for the growth in the average weekly earnings, the highest since 2009. The total pay growth also reached 2.9%. Unemployment went the other way, falling to 5.5% – the lowest value since 2008 – from Q2’s 5.6%.

In the US, the CPI (Consumer Price Index) went down in August mainly due to low gasoline prices. According to officials, this is its first decline since January. The drop was of 0.1% mom (month-on-month), as expected by analysts. Also within expectations was the annualized CPI, coming out at 0.2%. Although forecasts predicted a rise to 1.9%, the annualized core CPI remained the same as in the previous period: 1.8%. More specifically: goods price went down, the service industry has little to nothing as gain and energy prices collapsed around 15% in the last 12 months.

Thursday was grim for New Zeeland, the qoq (quarter-on-quarter) GDP (Gross Domestic Product) for the second quarter of the year coming at +2.4%, and not +2.5% as expected and +2.6% in Q1. HSBC’s top analysts’ research shows that things are not going so good for the Kiwi economy, all data pointing towards an economic slowdown.
As for Switzerland nothing of novelty on Thursday, the SNB (Swiss National Bank) leaving the key policy rates unaffected: 3-month Libor between -1.25% and -0.25%. The interest rate for on-sight deposits at the SNB is still -0.75%.

Last night, Fed informed about the decision to leave the key rate for federal funds untouched at 0-0.25%. FOMC (Federal Open Market Committee) declared in the press conference following right after, that an increase of the Federal funds rate will be viable only if the labor market will improve and inflation will have a strong midterm tunneled-path towards the 2% benchmark.

The yellow metal hiked over 1% with the drop in the US dollar and treasury yields right after Fed’s Chair Janet Yellen dovish statements, not taking any commitments about a future moment of a rate hike. At the time of writing, Gold was trading around 2014’s November value, quoting $1,132.90 per ounce. The so considered “safe-haven” has been very volatile in regards with the rate hike discussions, which started in Q4, 2014. Anyhow, last night’s release increased pressure on the dollar with rate hike bets decreasing, a direct consequence being a push-up in Gold prices.