The dust has barely settled with the end of the government stalemate, but investor worries are growing quickly as the likelihood that the Federal Reserve will implement a withdrawal of the current loose monetary policy are just as quickly evaporating. The 16-day closure o the federal government has led to raised expectations that the Fed’s initial plans to scale back stimulus are likely to be pushed well back into 2014 with a very slight chance that the bond purchase tapering will begin in December.
The U.S. Dollar Index traded at 79.675 .DXY, close to the 8-month low of 79.478 .DXY which was struck last Friday. The EUR/USD pair slipped lower to $1.3678, a loss of 0.1% but moving away from Friday’s 8-month peak of $1.3704, only a few pips from the 1-year high. The USD/JPY pair traded higher at 97.95 Yen, a gain of 0.2% but within striking distance of Thursday’s 3-week peak of 99.01 Yen.
Focus on Jobs Data and then Fed Meetings
Tomorrow, September’s non-farms payroll figures are to be released finally, with expectations that 180,000 new private sector jobs will be added. A positive surprise will give the Fed policy makers some breathing room when they meet toward the end of this month, the last but one FOMC meeting this year. A consensus of analysts is doubtful that the outcome will be promising, and expectations are that the Fed will disappoint at both October’s and December’s meetings, leaving the Dollar further weakened as a result.