21 Aug 2013
Flash: FOMC in spotlight - TD Securities
FXstreet.com (London) - Today we get existing home sales for July (mkt +1.4%, TD +3.0%), but markets will be more closely focused on the FOMC minutes from the 31 July meeting, which is widely expected to have been the last meeting before tapering begins,” said Alvin Pontoh, Asia-Pacific Macro Strategist, FX & Rates Strategy at TD Securities.
Key Quotes:
“The big surprise in the June FOMC Minutes was the reference to “half of these participants indicated that it likely would be appropriate to end asset purchases late this year”, and while this was in the appendix accompanying the SEP (which will not be part of these Minutes), it will likely be seen as the benchmark for judging the September tapering risks. We do not expect any explicit mention of a particular date or size of purchase reduction, but the characterization of the economic recovery and the impact of the increased financial sector volatility on the outlook since the June meeting will provide some important clues”.
“Bottom-line: Our expectation is for the tone of these Minutes to be more dovish than the June edition. And while our base-case continues to be for a September QE tapering announcement, the Minutes are likely to show a bias for a slower pace of reduction that the $20B-$25B being priced in by the markets”.
Key Quotes:
“The big surprise in the June FOMC Minutes was the reference to “half of these participants indicated that it likely would be appropriate to end asset purchases late this year”, and while this was in the appendix accompanying the SEP (which will not be part of these Minutes), it will likely be seen as the benchmark for judging the September tapering risks. We do not expect any explicit mention of a particular date or size of purchase reduction, but the characterization of the economic recovery and the impact of the increased financial sector volatility on the outlook since the June meeting will provide some important clues”.
“Bottom-line: Our expectation is for the tone of these Minutes to be more dovish than the June edition. And while our base-case continues to be for a September QE tapering announcement, the Minutes are likely to show a bias for a slower pace of reduction that the $20B-$25B being priced in by the markets”.