Market split on ‘to taper or not to taper’
City Index December 18, 2013 4:53 PM
<p>Sterling trades stronger in European trading ahead of the all-important FOMC this evening, with a robust employment report from the UK, which – in my […]</p>
Sterling trades stronger in European trading ahead of the all-important FOMC this evening, with a robust employment report from the UK, which – in my opinion – saw the reversal and rejection of the 0.8470 level in EUR/GBP.
The unemployment level dropped to 7.4% from 7.6% as the claimant count came in at -36.7k.
I’m starting to see a theme that I feel will increase in 2014 as central bankers do all they can to weaken their own currencies. Although the market hasn’t reacted to the MPC minutes that had a reference to the proud pound (stating “sterling strength maybe hurting the economic recovery”), this follows the continuous concern from Australia and Canada about the effects of the exchange rate on their economies. If the commonwealth central banks are successful in their plight then I suspect 2014 will bring out the ECB members on the single currency.
All eyes will be on the FOMC policy announcement tonight at 7pm, followed by Fed Chairman Bernanke’s statement at 7.30pm. The inflation data released yesterday that I highlighted did nothing to help a taper conclusion, with a 0% reading as the pro-taper camp highlighted lower energy prices for the benign reading.
I think the Wall Street Journal sums up the market quite perfectly:
1) Will they taper?
2) What do they cut?
3) Do they fiddle with the forward guidance?
4) What are the economic projections?
5) How will Bernanke handle his swan song?
Supports 1.3710-1.3675-1.3615 | Resistance 1.3815-1.3835-1.3880
Supports 102.60-102.20-101.65 | Resistance 103.45-103.95-104.30
Supports 1.6260-1.6215-1.6180 | Resistance 1.6400-1.6465-1.6500
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.