✍ MCX - WEEKLY NEWS LETTERS
✍ INTERNATIONAL NEWS
✍ Fed bows to market's more dovish view of soaring dollar :
The US central bank's far more modest inflation predictions, released on Wednesday, suggest that the strong currency and sagging oil prices are spooking policymakers more than they have let on. It sets the stage for later rate hikes than they expected, but which many investors have long anticipated. The Federal Reserve's back-pedaling on how aggressively it plans to raise interest rates acknowledges that the more dovish financial markets were right all along: turns out, the soaring dollar has stalled its policy-tightening plan. The US central bank's far more modest inflation predictions, released on Wednesday, suggest that the strong currency and sagging oil prices are spooking policymakers more than they have let on. It sets the stage for later rate hikes than they expected, but which many investors have long anticipated. A stronger dollar hurts US exporters and, along with cheap oil, puts further pressure on already weak inflation. In effect, it tightens financial conditions even while the Fed keeps its key policy rate near zero. "The Fed did not have to say it. The forecasts tell the story. The FOMC cares about the dollar," Jens Nordvig, global head of FX at Nomura, said of the policy-setting Federal Open Market Committee. Forecasts published after a two-day meeting show that Fed policymakers expect rates to rise to only about 0.6 percent by year end, down from a median of 1.1 percent in December. The 17 officials also slashed predictions for economic growth and inflation over the next two years. The dollar has spiked 22 percent against a basket of currencies since the Fed published its December forecast, continuing a trend since last summer. Oil prices have fallen about 25 percent in that time. The central bank's revisions effectively align policymakers with investors, who have mostly refused to believe a rate hike will come until September or later. Wall Street's top economists, who have long called for a June rate hike, now point to September, according to a Reuters poll. The Fed has, in effect, tied policy to the dollar. "It is now clear the bond market is not moving towards the Fed; the Fed is moving towards the bond market," said Tim Duy, a professor at the University of Oregon and a former US Treasury economist. He added that the Fed recognised the negative effects of a rising currency.
✍ US monetary policies making emerging economies weak :
IMF Speaking at the opening of China Development Forum here, Christine Lagarde said, the world has yet to achieve full economic recovery as global growth continues to be weighed down by high debt, high unemployment and lacklustre investment. The tightening of monetary policies by the US at a time when other countries are easing theirs could make emerging economies "vulnerable" as many of their firms and banks have sharply increased their borrowings in dollars in the last five years, the IMF Chief warned on Sunday. Speaking at the opening of China Development Forum here, Christine Lagarde said, the world has yet to achieve full economic recovery as global growth continues to be weighed down by high debt, high unemployment and lacklustre investment. Referring to IMF's recent forecast to cut global growth to 3.5 percent and 3.7 percent in 2015 and 2016 despite the boost from cheaper oil and stronger US growth, she said the global recovery remained fragile because of significant risks.

✍ Euro-dollar parity may be more elusive after Fed :
The dollar index slumped as much as 3 percent in the worst selloff in six years, after a dovish US central bank on Wednesday pared back its own forecasts for interest rate hikes, cut its outlook for inflation and warned the economy has been moderating. The Fed tripped up the dollar's rally and may have pushed the greenback into a short-term correction with its forecasts for a slower pace of interest rate hikes, strategists say. The dollar index slumped as much as 3 percent in the worst selloff in six years, after a dovish US central bank on Wednesday pared back its own forecasts for interest rate hikes, cut its outlook for inflation and warned the economy has been moderating. The euro hit a high of about USD1.10 to the dollar, in Wednesday afternoon trading, from a low point of USD1.05. As the dollar fell, stocks rallied and bond yields declined. The strengthening greenback has been a key factor in markets, sending ripples through US equities, as traders worry about its impact on the profits of multinationals. The strong dollar has also fanned fears about deflation, as it pounded commodities markets, like oil and gold and weighed on emerging markets.

BULLION
✍ Gold prices likely to trade positive:
Gold prices are likely to trade positive on the back of dovish US fed statements. Gold prices hit two-week highs on Friday and were poised for their biggest weekly jump since mid-January, after the U.S. Federal Reserve's cautious note on interest rates arrested a dollar rally and sparked broadbased buying of commodities. Spot gold has risen over 2 percent this week, recovering from a fourmonth low touched on Tuesday under pressure from expectations that the U.S. central bank is on track for its first interest rate increase in nearly a decade. Such a move would boost the dollar and lift the opportunity cost of holding non-yielding bullion. The Fed, however, indicated it preferred a more gradual path.

✍ Gold at near two-week high as dollar tumbles:
Spot gold gained 0.6 percent to USD 1,174.26 an ounce by 0041 GMT, after earlier climbing to USD 1,175.05, its highest since March 9. The metal gained 1.6 percent on Wednesday, its biggest one-day jump since Jan. 30. Gold extended gains on Thursday to its highest level in nearly two weeks as the dollar tumbled after the Federal Reserve signalled a slower pace of US interest rate hike and caution on US economic growth. FUNDAMENTALS Spot gold gained 0.6 percent to USD 1,174.26 an ounce by 0041 GMT, after earlier climbing to USD 1,175.05, its highest since March 9. The metal gained 1.6 percent on Wednesday, its biggest one-day jump since Jan. 30. The Fed on Wednesday moved a step closer to hiking rates for the first time since 2006, but downgraded its economic growth and inflation projections, signalling it is in no rush to push borrowing costs to more normal levels. The US central bank removed a reference to being "patient" on rates from its policy statement, opening the door wider for a hike in the next couple of months while sounding a cautious note on the health of the economic recovery. It also slashed its median estimate for the federal funds rate. Fed Chair Janet Yellen also sounded uncomfortable with the strength of the dollar, saying it would be a "notable drag" on exports and a downward force on inflation. The dollar has gained nearly 8 percent this year against a basket of major currencies as strong US economic data boosted expectations the Fed would soon start raising interest rates. Diverging global monetary policies have also helped. Gold, on the other hand, fell to a four-month low earlier this week as fears mounted regarding higher interest rates. The Fed's caution brought some bullion investors back on board.




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