Monetary policies of central banks drive the market in early 2013 and the FOMC Meeting Minutes did not exception.
Usually accused of letting slip its currency to attractive rates, the U.S. central bank took the opposite of traders indicating that several of its leaders were concerned about the impact of the asset purchases program conducted by the institution. Contrary to what was said last January 30 at the last meeting of the Fed, the possibility of reducing operations even before the labor market shows signs of improvement, was again discussed.
The anticipation of a Dollar rarer supports the U.S. dollar in containing risk appetite.
But the single currency is also subject to political uncertainty in Italy and a macroeconomics particularly gloomy despite the German exception. No clear majority seems to emerge in the next Italian parliament and negotiations to form a coalition government could slow the reforms initiated by the government of Mario Monti. In Spain, the deficit target of 6.3% set by Brussels for 2012 will probably not be reached, while activity in the eurozone shrinks beyond expectations.
Technically, the Euro has broken successively several supports and the bias becomes bearish in the short term. The trend remains bullish in the medium-term above USD 1.3130. These changes produce complex periods to negotiate and we must be careful. We are away from the cross.