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Onward to the ECB and BOE

Posted by WorldWideMarkets . on Aug 1, 2013 3:37:00 AM
The dollar sold off after the Federal Reserve gave no indication that it was ready to end its bond buying program to stoke the economy. That came after being strongly bid for most of Wednesday’s New York session on data showing the U.S. economy accelerated unexpectedly in the second quarter to 1.7 percent. Though there was some takeaway in the first quarter with a revision lower, the higher Q2 number bodes well for the second half which was already expected to show solid if not stellar growth. The private sector jobs report, though as continually noted not a great indicator of non-farm payrolls, also boded well for Friday’s jobs report. Both reports could bring the Fed closer to ending or tapering stimulus which would be good for the dollar but that was not what came out of the Fed at least on Wednesday. Don’t expect the impact of this Fed statement to last longer than the next time current Fed Chairman Ben Bernanke speaks. As Joseph Trevisani, chief market strategist at WorldWideMarkets said on Wednesday, “Today’s FOMC statement maintains the Fed’s maximum flexibility on quantitative easing. The end of the program was never going to be a cut and dried announcement in the official policy statement but in the various pronouncements of Chairman Bernanke. When quantitative easing ends, it will be a Bernanke quote that writes the epitaph.”
We now move on to the other two major central banks. The European Central Bank is widely anticipated to do nothing. With signs of life in the euro zone economy, their main problem going forward maybe dealing with the impact of Fed tapering on the global economy. The Bank of England is also expected to remain on hold though new Governor Mark Carney may use the opportunity to spell out his view of the UK economy and give some indication of when British stimulus may end. It may be premature to hope for such guidance from Carney but equally Carney surprised last month with being candid. It is not your father’s BOE. mark carney trading

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