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17 Sep 2013
Markets focussed on FOMC on the European open, USD slides
FXstreet.com (London) - Heading into the European session, markets remain focussed on the Fed and the outcome of the 2-day Federal Open Market Committee (FOMC) meeting, which begins today. Key to any market reaction is the future of the Fed’s open-ended QE programme – it is expected that the FOMC will cut its monthly bond purchases to $75bn from $85bn.
The dollar opened the week with a sharp fall following the announcement that dovish Larry Summers was withdrawing from the race to become the next Fed chairman, citing acrimony from the Democratic caucus, who had strongly opposed his candidacy. His replacement as favourite by Janet Yellen was seen as an increased likelihood that the Fed would be slower in tapering its QE liquidity injections into the market.
However, with a lack of any further positive news for equity markets, stocks declined overnight, with Asia-Pac pulling back from yesterday’s exuberance. Despite a weakening dollar, commodities dropped on diminishing risk as Syrian volatility declined following a US-Russia agreement.
The Nikkei shed 93 points to 14,311.67.
Gold currently stands at $1,318/oz, with little space for upside.
Similarly, currencies have reversed gains against the greenback – notably AUD and NZD. The Aussie dollar slid following the release of minutes from the Reserve Bank of Australia, reiterating its stance that it would be prepared to put in lace further rate cuts and that it would be targeting a weaker AUD as advantageous to the economy.
AUD/USD currently stands at USD0.9324. It declined to a session low of USD0.9288 on the RBA minutes, after topping out at a high of USD0.9386.
The dollar opened the week with a sharp fall following the announcement that dovish Larry Summers was withdrawing from the race to become the next Fed chairman, citing acrimony from the Democratic caucus, who had strongly opposed his candidacy. His replacement as favourite by Janet Yellen was seen as an increased likelihood that the Fed would be slower in tapering its QE liquidity injections into the market.
However, with a lack of any further positive news for equity markets, stocks declined overnight, with Asia-Pac pulling back from yesterday’s exuberance. Despite a weakening dollar, commodities dropped on diminishing risk as Syrian volatility declined following a US-Russia agreement.
The Nikkei shed 93 points to 14,311.67.
Gold currently stands at $1,318/oz, with little space for upside.
Similarly, currencies have reversed gains against the greenback – notably AUD and NZD. The Aussie dollar slid following the release of minutes from the Reserve Bank of Australia, reiterating its stance that it would be prepared to put in lace further rate cuts and that it would be targeting a weaker AUD as advantageous to the economy.
AUD/USD currently stands at USD0.9324. It declined to a session low of USD0.9288 on the RBA minutes, after topping out at a high of USD0.9386.