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19 Sep 2013
Flash: Heightened investor uncertainty over QE - BTMU
FXstreet.com (London) - Lee Hardman, currency strategist at The Bank of Tokyo-Mitsubishi UFJ notes that there is heightened investor uncertainty over when the Fed will end QE.
Key Quotes:
“The US dollar is also being undermined in the near-term by the Fed’s surprise decision to delay tapering QE”.
“While it remained a close call over whether the Fed would begin to taper QE at yesterday’s meeting, the decision came as a big surprise given that the Fed had not signalled any discomfort with the consensus view in the market of likely modest tapering heading into the meeting”.
“The FOMC stated that they would “await more evidence that progress (towards their unemployment and
inflation goals) will be sustained before adjusting the pace of its purchases” with Chairman Bernanke signaling that tapering will “possibly begin later this year”.”
“The strength of the incoming economic data will determine whether tapering begins at either the October or December FOMC meetings or even later. The Fed has also dropped its prior signal that QE maybe brought to an end when the unemployment rate reaches 7.0%, with FOMC participants now seeing the unemployment rate at
around 7.0% in early 2014. It is now more uncertain when QE will be brought to an end with it more likely to occur later 2014 if the US economy continues to strengthen”.
Key Quotes:
“The US dollar is also being undermined in the near-term by the Fed’s surprise decision to delay tapering QE”.
“While it remained a close call over whether the Fed would begin to taper QE at yesterday’s meeting, the decision came as a big surprise given that the Fed had not signalled any discomfort with the consensus view in the market of likely modest tapering heading into the meeting”.
“The FOMC stated that they would “await more evidence that progress (towards their unemployment and
inflation goals) will be sustained before adjusting the pace of its purchases” with Chairman Bernanke signaling that tapering will “possibly begin later this year”.”
“The strength of the incoming economic data will determine whether tapering begins at either the October or December FOMC meetings or even later. The Fed has also dropped its prior signal that QE maybe brought to an end when the unemployment rate reaches 7.0%, with FOMC participants now seeing the unemployment rate at
around 7.0% in early 2014. It is now more uncertain when QE will be brought to an end with it more likely to occur later 2014 if the US economy continues to strengthen”.