The week started out on a volatile note as the US Dollar weakened against its major peers on news that Lawrence Summers withdrew from the Federal Reserve chairmans' race. The market believes that Summers, a former Treasury Secretary, would tighten FED policy more than his main rival, Janet Yellen.
Of course the main event this week will be the much anticipated FOMC meeting on September 18 with traders pricing in some sort of a reduction in asset purchases to be implemented. Currently, the FED purchases $85 billion of fixed-income securities per month - $40 billion of mortgage-backed securities and $45 billion of US Treasuries. A Bloomberg survey showed that the consensus is for the FED to cut monthly purchases of Treasuries to $35 billion from $45 billion and keep mortgage-bond buying at $40 billion at this week’s meeting.