Dean Popplewell | Oct 29, 2013 06:59AM ET
There are no surprises. This week is getting off to a slow start, a trait that is threatening to shut the year out as both the Fed and BoJ are expected to deliver conservative messages later this week. US policy makers will be looking at damage control in the wake of the 16-day partial US government shutdown. Bernanke and company have been vocal along with staging some finger wagging at Capitol Hill indicating that their "house needs to be put in order" before sustainable economic progress can be attained.
The Fed is not in a position to change the rules of the game just yet. Governor Kuroda at the BoJ has not got an easier task. He continues to warn the masses against premature expectations of additional easing, just under a year into their own QE program. The crowed trade of being short the yen remains a frustrating investment.
The market is not pricing this in; being dollar long has more to do with the handling of Japan's "structural imperfection and reforms." Central Bankers would have anyone believe that a change in a policy stance has more 'bang for your buck' when delivered against market expectations. Yesterday's weaker than expected US pending home sales data (-5.6%) seems to have convinced many forex players that tomorrow's upcoming FOMC rate decision announcement will reveal only one thing – more of the same.
Stevens noted that the AUD level "isn’t supported by costs and productivity in the economy" and the nation’s "terms of trade are more likely to fall than rise." He added that at some point in the future, it seems quite likely that the AUD will be materially lower than its current level.
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