Traders await Bernanke's Christmas gift

In mid-morning trading the FTSE 100 is up 20 points, as traders cover their short positions ahead of the Federal Reserve meeting tonight.

This evening we will find out if Ben Bernanke is naughty or nice. Recent economic data from the US has highlighted the recovery, but it still seems too soon to trim the stimulus package. The jobless rate in the US has only recently dipped to 7%, and could well be revised upward next month. So I think the US central bank will wait for further proof that the economy can withstand a reduction in the QE scheme. Traders who feel the Fed will leave its policy unchanged are in no rush to buy, but we could see a sharp sell-off if tapering is triggered.

British supermarkets are in the red, which is a worrying sign when we are in the run-up to Christmas. It would appear that Britons are still in a prudent frame of mind, even though economic optimism is on the rise.

BP has had some positive news from the Gulf of Mexico for a change. The oil company has announced a ‘significant’ oil discovery in the region.

In the US, we are expecting the Dow Jones to open 50 points higher at 15,925, as investors refuse to give in to tapering fears.

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