Though James Bullard is not a voting member of the Fed now, he is still concerned with the Committee’s inside. For this reason his comments that FOMC could start increasing the rates earlier than expected by the market stopped the US dollar from falling in the morning yesterday. And then the almost forgotten fear again fell upon the markets, the fear about Europe’s ‘troubled’ countries and their financial sectors. The second largest bank of Portugal aroused particular concerns around its solvency, as Espirito Santo International, a shareholder of Banco Espirito Santo SA, missed short-term debt payments. It immediately stirred concerns about more…
Tag Archives: FOMC
Fed to end QE by October
EUR/USD
As reported in yesterday’s meeting minutes of FOMC, if the US economy maintains the expected growth rate, the Fed will announce the end of QE already in October. It means that at the October meeting the decrease will make 15bln and before that, in July and September, asset purchases will be reduced by 10bln. It is unlikely that the Fed will give up this course for a quicker one because of the strong employment data. It is remarkable that the minutes highlighted concerns about investors’ possible misinterpretation of the risks in the hope that interest rates will remain low for long. more…
FOMC’s caution puts pressure on USD
EUR/USD
The mild Yellen has remained her own self. Against our expectations that FOMC would learn a lesson from the financial crisis and would choose another policy for the Fed, it treated the macroeconomic forecasts with great caution after the poor beginning of the year. The long-term GDP forecasts were slightly revised down. Though at the same time the spread between the rates increased, thus reflecting a more hawkish mood than earlier. The markets preferred not to focus on the last moment, seeing only caution regarding the future measures. The markets got quiet about the possible acceleration of tapering and approach of more…
EUR is trying to grow against the news
EUR/USD
Yesterday we again saw how the market was ‘selling’ facts. The so-much-awaited report on consumer prices in the eurozone showed slowdown. The annual inflation is again at the lows of March (0.5%). Those, in their turn, are the lowest in five years. Before the release of the data the euro/dollar had been pushed down and the pair again had hit the local lows at 1.3585. However, the released statistics stirred short covering. It was supported afterwards. As a result, the euro grew to 1.3646. Since no input data have changed and the ECB is still expected to ease the policy, yesterday’s more…
EUR doesn’t surrender 1.37
EUR/USD
The euro/dollar has been depreciating for the recent two weeks. Despite the fact that during the last week the pair has mainly been close to 1.3700, we can’t but notice that bears still contrive to push it lower and lower before bulls gain revenge. Yesterday’s local low preceding the FOMC meeting minutes brought the euro to 1.3634. The minutes themselves proved to be milder than could be expected. The news released before the meeting on April 29-30 was generally positive, so the market expected to see more confidence about tapering and, probably, more certainty about rates. However, ‘flexibility’ in consideration of more…