Wij gebruiken een aantal cookies om u de best mogelijke browser ervaring te bieden. Door deze website te blijven gebruiken, gaat u akkoord met ons gebruik van cookies. U kunt hier meer leren over ons cookie-beleid of door op de link te klikken onderaan iedere pagina van onze website.
The October FOMC meeting starts next Tuesday, but with a batch of soft economic reports and the impact of the government shutdown yet to be fully discovered, it seems very unlikely that the Fed will scale back the size of its monthly asset purchases.
The bitter wrangling in Washington this month appears to have depressed consumer spirits, with the University of Michigan’s widely-followed index of consumer sentiment dropping to 73.2 for the final reading in October.
This is even worse than the disappointing mid-month preliminary level of 75.2, and substantially down from September’s final reading of 77.5. The weakest area of the index was in the expectations component, which slumped from a level of 67.8 in September to 62.5.
Judging by today’s report, consumers are worried about their prospects and that is likely to hamper their spending. That suggests a gloomy outlook for the US economy, with personal consumption expenditures accounting for more than two thirds of US GDP growth.
Alongside Tuesday’s soft labour report, conditions are therefore not looking conducive for the Fed to taper its stimulus. Economists polled by Bloomberg now show a consensus estimate for tapering being delayed until March 2014. QE should act to debase a currency, so the prospect of nearly half a year before we see even the first reduction in stimulus is dollar negative.
By mid-afternoon in New York, EUR/USD was up 0.02% at 1.3803, having earlier touched 1.3832, its highest level since November 2011. The dollar has declined 0.8% against the euro this week.