iNVEZZ.com, Thursday 31 October:
Yesterday’s FOMC statement signalled that tapering of the Fed’s asset purchases continues to be on hold, and not off the agenda, in line with market expectations. The US dollar has gained across as the board since release of a statement in which the Committee dropped its reference to “tightening in financial conditions observed in recent months”. And while policymakers seem to be content with the recent decline in US mortgage rates, they downgraded their assessment on the housing market, referencing the recent lacklustre updates from the sector.
According to analysts at Barclays Capital, the statement suggests that the FOMC is closing in on a decision to taper but has yet to see decisive evidence to trigger that move. The committee “appears willing to keep its options open at upcoming meetings”, but the UK bank doubts economic data will take such a strong turn by December to justify a decrease that month in the pace of bond buying. Barclays maintains its view that “the Fed will reduce the pace of asset purchases to $70bn per month in March of next year”.
Following the FOMC statement, sterling dropped sharply to a two-week low at 1.5998.
GFK’s UK Consumer Confidence for October came out just after midnight UTC today, falling short of forecasts for -8 with the softer reading of -11, marginally below September’s -10, which remains the best level since the financial crisis.
The current-month Nationwide’s UK House Price Index m/m checked in earlier today at 1.0 percent, comfortably beating expectations for a rise of 0.7 percent, following the prior period’s gain of 0.9 percent. House prices have thus maintained the “momentum that has been building in the second half of 2013” on the back of a sustained upward trend in the wider UK economy, said Robert Gardner, chief economist at Nationwide.
In the US today, Unemployment Insurance Initial Claims for last week are due out at 12.30 UTC, with the consensus for a drop to 339,000 from the prior period’s 350,000.
Right now, the GBP/USD is trading around 1.6045, down 0.02 percent intraday.
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