If the Fed increases their inflation and lowers their unemployment projections, the case for QE3 weakens significantly. As a result, we don’t expect the Fed or Bernanke to make it crystal clear that QE3 is necessary – the door is open but no one is ready to walk through it. At the end of the day, Federal Reserve officials are still very divided on monetary policy and given the level of market expectations, this means there is scope for a squeeze higher in the U.S. dollar after the FOMC announcement.
Featured Posts (1441)
Sort by
http://www.businessweek.com/articles/2012-04-09/to-qe3-or-not-to-qe3
Eurozone may now be facing its third consecutive quarter of contraction in the wake of much weaker than expected flash PMI readings from the region. German and French data was weaker as well with both services and manufacturing data also missing estimates.
This upcoming week, Fed Chairman Ben Bernanke will have to decide whether or not the turn in data is significant enough to prepare the market for QE3. We believe that the FOMC statement will sound neutral to dovish but Bernanke will be holding a press conference after the monetary policy announcement this month and he will undoubtedly be asked some tough questions about QE3.
http://www.fx360.com/commentary/kathy/7441/usd-why-this-fomc-meeting-is-so-important.aspx
Concerns about the outlook for Spanish banks were offset by what is believed to be EUR repatriation. It is not difficult to understand why EUR repatriation is good for the currency but what may be more confusing is the motivation for repatriation.
http://www.fx360.com/?et_cid=21271925&et_rid=wallstreet1928@gmail.com
FX algos and mean-reversion traders see no economic value in breaking EURUSD out of its 2-week long consolidation range of $1.30-1.32 before next Wednesdays key FOMC decision
Recent intermittent bounces in EURUSD in the face of surging Eurozone spreads are said to be reflecting possible liquidation by European banks unloading US assets to relieve an ensuing shortage of US dollars.
http://ashraflaidi.com/articles/april-fears-ahead-of-fed-spain-china.asp
The 10-year bonds were sold at a yield of 5.743%, up from 5.403% when the bonds were last sold in February.
http://www.bbc.co.uk/news/business-17769769
MPC minutes revealed that UK monetary authorities voted 9-0 to keep rates unchanged and 8-1 not to expand QE any further as concerns over inflation cast a decidedly hawkish tone to the meeting. Adam Posen, historically one of the more dovish members of the MPC, dropped his long standing call for more easing leaving Miles as the solitary voice for more QE.
