News Feed Item

FXPRIMUS Market Brief of the Week: Investors Continue Seeking Federal Reserve's (Fed) Monetary Policy to Gauge Direction

SINGAPORE, SINGAPORE -- (Marketwired) -- 01/09/14 -- In FXPRIMUS' Market Brief of The Week for 6 January, the brokerage firm's Senior Economist, Jimmy Zhu, looks at the Fed's current monetary policy and possible effects on the market.

Economic Insights

Fed policy will likely dominate sentiment in upcoming months

The Fed decided to pull back its monthly bonds purchases last month, setting the USD and equities more solid. However, treasuries fell sharply on the rising borrowing cost concern. Of course, easy money isn't over yet as inflation remains a good reason for the Fed to continue its mega stimulus program, pledging to keep interest rates at record lows. I estimate that the following few Federal Open Market Committee (FOMC) meetings will track the possibilities below:

1.  The unemployment rate is still too high, so maintaining a highly
    accommodative monetary policy in the upcoming few months is necessary.
2.  With Fed asset purchases, most voting members believe that benefits
    outweigh the cost of Quantitative Easing (QE), since the plan
    contributes to economic growth and improves outlook.
3.  Fed's QE tapering is not a pre-set course. Janet Yellen also said that
    each of the Fed's monetary policy meetings will continue assessing the
    economic outlook and decide whether QE will continue reducing.
4.  Regarding financial stability, Yellen reiterated her view on asset
    bubbles prevention; the best way to stabilize the financial system is
    through regulatory policy, rather than adjusting the current monetary

Overall, there shouldn't a significant monetary policy adjustment in first half of 2014.

However, based on Fundamentals, higher borrowing costs on US sovereign debt and the improving economy will help boost the Dollar this year, especially against the Aussie and Yen. It was well proven in 2013. Policy divergence could be one of the main strategies used by currency traders. In 2014, major central banks are set on diverging paths in terms of monetary policy, and the US economy will support a slightly "tightening" view compared to the rest.

The FOMC will probably continue tapering over its next seven meetings before ending the program in December, according to current estimates. If this is the case, the average tapering amount per meeting should be around USD 10 billion.

Looking at available recent U.S. economic indicators, Manufacturing grew in December at the second-fastest pace in more than two years. Another key report will be released this Friday - the Non-Farm Payroll (NFP), which should stay well above 180K.

Let us assume that US fundamentals are really solid, as I mentioned earlier. The challenge for other central banks is that if long-term borrowing costs do rise in the US, they have to ease monetary policy further, given that there are fragile economies elsewhere. Historically, markets are highly correlated, so if we see US rates rise, it will be hard for European rates to stay where they are. The same goes for Australia, New Zealand or even Japan. This offers investors a clear direction to make the correct decision.

The European Central Bank's (ECB) rate decision and press conference will be this Thursday. I do not think another rate cut will arrive this week. However, if deflationary risks mount significantly, Mario Draghi will need to start looking at other options besides the rate cut since the Fed trims down its assets purchases.

Top news this week
U.S. Non Farm Payrolls in December
I expect figures to come in at 198K.

ECB Rate Decision
I expect figures to come in at 0.25% unchanged.


FXPRIMUS offers retail traders a level of trade execution, service quality and fund safety that are normally reserved only for the largest investors. Serving traders in 205 countries across 6 continents FXPRIMUS combines an unmatched level of fund safety with regular independent audits of company financials and Straight Through Processing, top notch execution with tight spreads, prompt and responsive customer support, ISO 27001 certification in Information Security, ISO 9001:2008 certification in Quality Management and an industry-leading trader toolset that includes free access to powerful trader tools. FXPRIMUS truly is The Safest Place To Trade.

Add to Digg Bookmark with del.icio.us Add to Newsvine

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
@DevOpsSummit has been named the ‘Top DevOps Influencer' by iTrend. iTrend processes millions of conversations, tweets, interactions, news articles, press releases, blog posts - and extract meaning form them and analyzes mobile and desktop software platforms used to communicate, various metadata (such as geo location), and automation tools. In overall placement, @DevOpsSummit ranked as the number one ‘DevOps Influencer' followed by @CloudExpo at third, and @MicroservicesE at 24th.
One of biggest questions about Big Data is “How do we harness all that information for business use quickly and effectively?” Geographic Information Systems (GIS) or spatial technology is about more than making maps, but adding critical context and meaning to data of all types, coming from all different channels – even sensors. In his session at @ThingsExpo, William (Bill) Meehan, director of utility solutions for Esri, will take a closer look at the current state of spatial technology and ar...
SYS-CON Events announced today that Interface Masters Technologies, a leader in Network Visibility and Uptime Solutions, will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Interface Masters Technologies is a leading vendor in the network monitoring and high speed networking markets. Based in the heart of Silicon Valley, Interface Masters' expertise lies in Gigabit, 10 Gigabit and 40 Gigabit Eth...
Everyone knows that truly innovative companies learn as they go along, pushing boundaries in response to market changes and demands. What's more of a mystery is how to balance innovation on a fresh platform built from scratch with the legacy tech stack, product suite and customers that continue to serve as the business' foundation. In his General Session at 19th Cloud Expo, Michael Chambliss, Head of Engineering at ReadyTalk, will discuss why and how ReadyTalk diverted from healthy revenue an...
As software becomes more and more complex, we, as software developers, have been splitting up our code into smaller and smaller components. This is also true for the environment in which we run our code: going from bare metal, to VMs to the modern-day Cloud Native world of containers, schedulers and microservices. While we have figured out how to run containerized applications in the cloud using schedulers, we've yet to come up with a good solution to bridge the gap between getting your conta...
Without lifecycle traceability and visibility across the tool chain, stakeholders from Planning-to-Ops have limited insight and answers to who, what, when, why and how across the DevOps lifecycle. This impacts the ability to deliver high quality software at the needed velocity to drive positive business outcomes. In his session at @DevOpsSummit 19th Cloud Expo, Eric Robertson, General Manager at CollabNet, will show how customers are able to achieve a level of transparency that enables everyon...
SYS-CON Events announced today that Streamlyzer will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Streamlyzer is a powerful analytics for video streaming service that enables video streaming providers to monitor and analyze QoE (Quality-of-Experience) from end-user devices in real time.
SYS-CON Media announced today that @WebRTCSummit Blog, the largest WebRTC resource in the world, has been launched. @WebRTCSummit Blog offers top articles, news stories, and blog posts from the world's well-known experts and guarantees better exposure for its authors than any other publication. @WebRTCSummit Blog can be bookmarked ▸ Here @WebRTCSummit conference site can be bookmarked ▸ Here
You have great SaaS business app ideas. You want to turn your idea quickly into a functional and engaging proof of concept. You need to be able to modify it to meet customers' needs, and you need to deliver a complete and secure SaaS application. How could you achieve all the above and yet avoid unforeseen IT requirements that add unnecessary cost and complexity? You also want your app to be responsive in any device at any time. In his session at 19th Cloud Expo, Mark Allen, General Manager of...
In past @ThingsExpo presentations, Joseph di Paolantonio has explored how various Internet of Things (IoT) and data management and analytics (DMA) solution spaces will come together as sensor analytics ecosystems. This year, in his session at @ThingsExpo, Joseph di Paolantonio from DataArchon, will be adding the numerous Transportation areas, from autonomous vehicles to “Uber for containers.” While IoT data in any one area of Transportation will have a huge impact in that area, combining sensor...
DevOps theory promotes a culture of continuous improvement built on collaboration, empowerment, systems thinking, and feedback loops. But how do you collaborate effectively across the traditional silos? How can you make decisions without system-wide visibility? How can you see the whole system when it is spread across teams and locations? How do you close feedback loops across teams and activities delivering complex multi-tier, cloud, container, serverless, and/or API-based services?
Almost everyone sees the potential of Internet of Things but how can businesses truly unlock that potential. The key will be in the ability to discover business insight in the midst of an ocean of Big Data generated from billions of embedded devices via Systems of Discover. Businesses will also need to ensure that they can sustain that insight by leveraging the cloud for global reach, scale and elasticity.
So you think you are a DevOps warrior, huh? Put your money (not really, it’s free) where your metrics are and prove it by taking The Ultimate DevOps Geek Quiz Challenge, sponsored by DevOps Summit. Battle through the set of tough questions created by industry thought leaders to earn your bragging rights and win some cool prizes.
Today every business relies on software to drive the innovation necessary for a competitive edge in the Application Economy. This is why collaboration between development and operations, or DevOps, has become IT’s number one priority. Whether you are in Dev or Ops, understanding how to implement a DevOps strategy can deliver faster development cycles, improved software quality, reduced deployment times and overall better experiences for your customers.
The security needs of IoT environments require a strong, proven approach to maintain security, trust and privacy in their ecosystem. Assurance and protection of device identity, secure data encryption and authentication are the key security challenges organizations are trying to address when integrating IoT devices. This holds true for IoT applications in a wide range of industries, for example, healthcare, consumer devices, and manufacturing. In his session at @ThingsExpo, Lancen LaChance, vic...