Major Currency Pairs Analysis: September 23, 2013
ICM Brokers | Sep 23, 2013 05:07AM ET
EUR/USD
The euro was steady close to eight-month highs against the dollar on Friday after St. Louis Federal Reserve President James Bullard indicated that the U.S. central bank could start to taper its stimulus program in October. The greenback found support after St. Louis Fed President James Bullard said the decision not to taper in September was “close”, and did not rule out a small reduction in the central bank's bond purchases in October. The comments came during an interview with Bloomberg television. The euro rallied to its highest level since February against the dollar after the Federal Reserve said Wednesday that it wanted to see more evidence of a sustained economic recovery before it adjusted the scale of its bond buying program. The announcement surprised markets, which had been expecting the Fed to cut its USD85 billion-a-month stimulus program by $10 billion to $15 billion. In a press conference following the Fed statement, Chairman Ben Bernanke reiterated that the plan to taper asset purchases was never a "preset course," and added that the bank's decision was dependent on how the economic recovery continues to progress. The central bank also revised down its outlook for growth this year to a range of 2% to 2.3%, from its June forecast for 2.3% to 2.6% growth.
GBP/USD
The pound slipped lower against the dollar on Friday after the president of the St. Louis Federal Reserve indicated that the U.S. central bank could start to taper its stimulus program in October. The greenback found support after St. Louis Fed President James Bullard said the decision not to taper in September was “close” and did not rule out a small reduction in the central bank's bond purchases in October. The comments came during an interview with Bloomberg television. The greenback hit eight-month lows against sterling after the Federal Reserve said Wednesday that it wanted to see more evidence of a sustained economic recovery before it adjusted the scale of its bond buying program. The announcement surprised markets, which had been expecting the Fed to cut its $85 billion-a-month stimulus program by $10 billion to $15 billion. Data on Friday showed that the U.K. public deficit decreased to £13.16 billion in August, from £14.41 a year earlier.
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USD/JPY
The dollar touched one-week highs against the yen on Friday after a senior Federal Reserve official indicated that the bank could start to reduce its stimulus program in October. St. Louis Federal Reserve President James Bullard said the decision not to taper in September was “close”, and did not rule out a small reduction in the central bank's bond purchases in October. The comments came during an interview with Bloomberg television. The dollar dropped to three-week lows against the yen on Wednesday after the Federal Reserve said it wanted to see more evidence of a sustained economic recovery before it adjusted the scale of its bond buying program. The decision surprised markets, which had been expecting the Fed to cut its USD85 billion-a-month stimulus program by USD10 billion to USD15 billion. In a press conference following the Fed statement, Chairman Ben Bernanke reiterated that the plan to taper asset purchases was never a "preset course." He also added that the bank's decision was dependent on how the economic recovery continues to progress. The central bank also said it will keep interest rates on hold at record low levels until the unemployment rate falls to around 6.5%, as long as inflation doesn't accelerate beyond 2.5% a year.
USD/CAD
The U.S. dollar gained ground against the Canadian dollar on Friday after St. Louis Federal Reserve President James Bullard indicated that the bank could start to taper its stimulus program in October. The greenback found support after James Bullard said the decision not to taper in September was “close”, and did not rule out a small reduction in the central bank's bond purchases in October. The comments came during an interview with Bloomberg television. The greenback hit three-month lows against the Canadian dollar after the Federal Reserve said Wednesday that it wanted to see more evidence of a sustained economic recovery before it adjusted the scale of its bond buying program. The decision surprised markets, which had been expecting the Fed to cut its $85 billion-a-month stimulus program by $10 billion to $15 billion. In Canada, data on Friday showed that the annual rate of consumer price inflation ticked down to 1.1% in August, from 1.3% in July, but came in above forecasts for annual inflation of 1%.
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