After beginning the week on Monday and Tuesday posting solid gains, the last few days have seen gold and silver retreat a bit. This retreat is none too unusual considering the fact that both the US Dollar and US equity markets are performing better. With that said, the first few days of this week saw equity markets around the world lose a lot of value thanks to global economic worries. Those worries have since calmed down a bit, but they will undoubtedly still be lingering on the minds of investors.
This week has played host to quite a bit of economic data from around the world, but those reports from the United States have been the most important. As we look forward, the attention of the marketplace will slowly but surely be drawn to the upcoming European Central Bank meeting as it is widely believed that an important monetary policy shift will be announced then.
Global Monetary Policies Take Center Stage
Though this week has been dominated by economic data from around the world, it is becoming quite evident that investors are much more concerned with the future of monetary policies across the globe. Just yesterday, the minutes from the FOMC’s December meeting were released and, much to the surprise of almost no one, those minutes showed that the Fed is in no rush to hike interest rates in the United States. According to the minutes, the Fed plans on keeping interest rates at near-zero levels at least through the first quarter of 2015.
Though some investors may be confused as to why interest rates aren’t being hiked in the middle of such a robust period of economic growth in the United States, but the simple answer to that is that it takes much more than solid economic growth at home for the Fed to become convinced that interest rates should, indeed be hiked.
In addition to all this focus on the FOMC, many investors are already beginning to speculate with regard to what the outcome of the upcoming European Central Bank meeting will be. As it stands, most investors are anticipating that the EU’s central bank will announce a shift in monetary policy by way of introducing a government bond-buying initiative very similar to the United States’ quantitative easing. Though it is not a definite that such an announcement will be made at the next ECB meeting, this is what many investors believe. This thought alone has been enough to push the Euro’s value downward even further. In fact, many market experts expect that the Euro will be beaten down even further as this year plays out. This, of course, is great news for the US Dollar and all those who are invested in it.