Liu Xia: Trends In The United States, Europe, The Pound And Australia

　　 Dollar index

The Federal Reserve will hold a monetary policy meeting this week, and, no surprise, it will announce the end of its bond buying program. In the third round of quantitative easing, the Federal Reserve purchased $40 billion of mortgage-backed securities and $45 billion of treasury bonds a month. The monetary policy since December 2008, along with the interest rate cut, has promoted the recovery of the real estate market, aiming to drive the growth of the U.S. economy. In the first quarter of 2009, the economic growth rate of the United States has been above 2%, maintaining a basic negative growth rate since the third quarter of 2009.

If GDP growth continues to stay at 2% - 3%, the Fed's interest rate hike will come as scheduled. After QE's safe exit this month and the Federal Reserve's interest rate hike next year, the US dollar is likely to rise stronger in the medium and long term. Before this week's FOMC meeting, the US dollar index was mainly down slightly. In terms of economic data, the third quarter GDP, durable goods orders and consumer confidence index in the United States are particularly noteworthy.

　　 Australian dollar

"The extremely low global interest rate situation will continue for some time" and will remain unchanged at the historical low of 2.5%, said RBA assistant chairman Rowe. Australia's labor market is relatively sluggish, and commodity prices continue to fall. Taking iron ore as an example, the price of iron ore has reached new lows. The decline in iron ore prices is directly related to the decline in China's steel demand and the decline in the property market. In addition, price volatility is also affected by the seasonality. In the medium and long term, there is still room for the Australian dollar to decline.

　　 euro

Euro zone growth continued to be weak, with inflation expectations in October below 1% for 13 consecutive months, forcing the European Central Bank to take more action. More worrisome, the European Central Bank's bank stress test released over the weekend showed that the total amount of new bad debts of euro zone banks was as high as 879 billion euro, equivalent to 9% of the euro zone's annual GDP. The size of the ECB's bond purchases at 22:30 p.m. on Monday night is worth watching.

　　 pound

A further downturn in the eurozone also puts the UK at risk. Britain's consumer price index in September hit a five-year low of 1.2%. Faced with the slow growth of CPI and wages, the Bank of England has more reasons to keep interest rates low. The expected time point for interest rate hikes has also been pushed to mid-2015. The pound is likely to remain low for some time.