28 Oct 2013
Dollar lacking conviction ahead of US open
FXstreet.com (London) - The dollar has seen little conviction ahead of the US open, with markets expecting little action from the Federal Reserve when it meets tomorrow.
The Fed will today release US industrial production figures, with consensus expectations for a 0.4 percent rise, matching last month’s figure.
US pending home sales are also due.
EUR/USD is down 0.12 percent to USD1.3791 after hitting highs of USD1.3817.
GBP/USD is down 0.1 percent to USD1.6157 after a high of USD1.6208.
Any tapering expectations from the Fed have been pushed into next year following the US government shutdown at the beginning of this month, as well as weak labour market data. With the US set to hit its temporarily-extended debt ceiling on 7 February, it is now the expectation that the Fed will wait until at least its March meeting to announce any tapering of its USD85bn-a-month asset purchase programme. But with Janet Yellen nominated to take over the reins of the Fed when Bernanke steps down at the end of January, the central bank will likely side with just as loose a monetary policy approach. Any relative tightening of policy would require some sustained labour market improvements between now and March.
The dollar has been in a bearish trend on expectations of continuing loose policy, and with little in the way of robust US macro news, it is difficult to see the dollar breaking this trend without a significant change in Fed outlook.
The Fed will today release US industrial production figures, with consensus expectations for a 0.4 percent rise, matching last month’s figure.
US pending home sales are also due.
EUR/USD is down 0.12 percent to USD1.3791 after hitting highs of USD1.3817.
GBP/USD is down 0.1 percent to USD1.6157 after a high of USD1.6208.
Any tapering expectations from the Fed have been pushed into next year following the US government shutdown at the beginning of this month, as well as weak labour market data. With the US set to hit its temporarily-extended debt ceiling on 7 February, it is now the expectation that the Fed will wait until at least its March meeting to announce any tapering of its USD85bn-a-month asset purchase programme. But with Janet Yellen nominated to take over the reins of the Fed when Bernanke steps down at the end of January, the central bank will likely side with just as loose a monetary policy approach. Any relative tightening of policy would require some sustained labour market improvements between now and March.
The dollar has been in a bearish trend on expectations of continuing loose policy, and with little in the way of robust US macro news, it is difficult to see the dollar breaking this trend without a significant change in Fed outlook.