Investors now appear to be fully resigned to the fact that the Federal Reserve won’t begin tapering its monthly asset purchases anytime soon given the recent data and events, all of which is weighing heavy on the U.S. Dollar which is broadly on the defensive. The U.S. Dollar Index, the measure off the Dollar’s strength versus its major rivals, was essentially flat and trading at 79.189 .DXY, close to a recently struck 9-month low.
As reported at 10:52 a.m. (JST) in Tokyo, the EUR/USD was trading at $1.3802, close to Thursday’s 2-year peak of $1.3825. Even data which showed that Eurozone business growth was off the recent pace failed to sidetrack the common currency, because the data which showed manufacturing output dropping in the U.S. trumped that news in the collective opinions of FX investors. The USD/JPY pair did edge 0.1% higher to trade at 97.39 Japanese Yen, moving away from Wednesday’s 2-week trough; analysts point out that the bond yield differential between U.S. Treasuries and Japanese Government Bonds is giving some support to the greenback.
Fed Seen Pushing Tapering to March 2014
Market players will return their focus to the Federal Reserve early next week when the Federal Open Market Committee meets to decide monetary policy. The consensus of recently polled economists indicates that the Fed won’t likely consider QE tapering, pushing that possibility until late in the first quarter of 2014 at the earliest.