21 Nov 2013
European open: Fed minutes cut tapering bets, European flash PMIs due
FXstreet.com (London) - The Federal Reserve once again changed the direction of tapering bets yesterday.
Minutes from the Federal Open Market Committee’s October meeting showed they may taper their USD-85bn-a-month asset purchase programme “in coming months” if the economy improves as projected.
The FOMC “generally expected that the data would prove consistent with the committee’s outlook for ongoing improvement in labor market conditions and would thus warrant trimming the pace of purchases in coming months.”
The minutes gave the dollar a strong boost after having been under pressure on expectations of continuing ultra-loose monetary policy.
EUR/USD dropped from USD1.3544 to USD1.3421 on the announcement.
However the biggest move was between the US and Japan on contrasting monetary policy expectations. USD/JPY is up 0.7 percent, once again above the psychologically important JPY100 level to JPY100.7850.
The Fed minutes helped open the yield gap between the respective countries to 2.19 percent, a two-month high.
Over the Asian session, Chinese HSBC Flash PMI for November missed expectations at 50.4 versus 50.8, down from last month’s print of 50.9.
In Europe, November flash PMIs will be released. France is expected to come in unchanged at 51.0 while Germany is expected to see a 0.3 point rise to 52.0. However, there is potential for upside, particularly in the services component should the ECB rate cut have filtered down.
UK public sector net borrowing numbers are due today, the last set of numbers before the Chancellor’s Autumn statement. Expectations are for PSNB-ex support for financial institutions to come in at GBP7.2bn.
Minutes from the Federal Open Market Committee’s October meeting showed they may taper their USD-85bn-a-month asset purchase programme “in coming months” if the economy improves as projected.
The FOMC “generally expected that the data would prove consistent with the committee’s outlook for ongoing improvement in labor market conditions and would thus warrant trimming the pace of purchases in coming months.”
The minutes gave the dollar a strong boost after having been under pressure on expectations of continuing ultra-loose monetary policy.
EUR/USD dropped from USD1.3544 to USD1.3421 on the announcement.
However the biggest move was between the US and Japan on contrasting monetary policy expectations. USD/JPY is up 0.7 percent, once again above the psychologically important JPY100 level to JPY100.7850.
The Fed minutes helped open the yield gap between the respective countries to 2.19 percent, a two-month high.
Over the Asian session, Chinese HSBC Flash PMI for November missed expectations at 50.4 versus 50.8, down from last month’s print of 50.9.
In Europe, November flash PMIs will be released. France is expected to come in unchanged at 51.0 while Germany is expected to see a 0.3 point rise to 52.0. However, there is potential for upside, particularly in the services component should the ECB rate cut have filtered down.
UK public sector net borrowing numbers are due today, the last set of numbers before the Chancellor’s Autumn statement. Expectations are for PSNB-ex support for financial institutions to come in at GBP7.2bn.