If investors’ attention is directed to the ECB meeting this
Thursday, it’s undoubtedly the Fed publication on Friday, November 7 which is in
their minds.
Since the end of the Shut Down on October 16, changes in the
Federal Reserve are under the news spot. The financial markets scrutinize the
decisions and the results generated by the most powerful central bank. Next Friday, the Fed publication will set the landscape
of the financial markets.
Everything will revolve around the Fed policy and the investors will
be asking themselves: will the Federal Reserve continue to provide liquidity by
buying for $85 billion securities obligations or not?
But first of all, the unemployment rate and the projected rates
inflations will be discussed. Ben Bernanke current Fed chairman was clear,
reaching 6.5% unemployment and 2% inflation would lead to a progressive
injection stop, a sign of a good US economy health.
The same idea is taken this week by Members of the Federal Open
Market Committee “FOMC” . According to
the governor Jerome Powell, “timing is necessarily uncertain” everything
depends on the economic growth and the Fed is not in hurry to cut buying bonds.
Also, Eric Rosengreen, president of the Boston Reserve, believes that there are
two “hypothetical” situations: the first one with the policy staying “unchanged
until April 2014”, the second one with the buying reduced progressively “$75
billions in December, $50 billions in January, $25 billions in March and completed
altogether by April” depending on the economic growth. Rosengreen also
suggested that the interest rate remains lower after stopping purchases in
April 2014, until the unemployment rates reaches 5.25%.
As the economic situation has not changed and the objectives set
by Bernanke have not yet been achieved, purchases of securities by the Fed will
not stop, thus calling into question the speculations about the cessation of
liquidity injection in March 2014. Like the euro, the dollar will remain under
selling pressure and this week will difficult and uncertain for the most traded
currency in the world.
