Welcome!

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
    policy.

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.

ABOUT FXPRIMUS

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
In his keynote at @ThingsExpo, Chris Matthieu, Director of IoT Engineering at Citrix and co-founder and CTO of Octoblu, focused on building an IoT platform and company. He provided a behind-the-scenes look at Octoblu’s platform, business, and pivots along the way (including the Citrix acquisition of Octoblu).
Cloud computing delivers on-demand resources that provide businesses with flexibility and cost-savings. The challenge in moving workloads to the cloud has been the cost and complexity of ensuring the initial and ongoing security and regulatory (PCI, HIPAA, FFIEC) compliance across private and public clouds. Manual security compliance is slow, prone to human error, and represents over 50% of the cost of managing cloud applications. Determining how to automate cloud security compliance is critical...
The Internet of Things is clearly many things: data collection and analytics, wearables, Smart Grids and Smart Cities, the Industrial Internet, and more. Cool platforms like Arduino, Raspberry Pi, Intel's Galileo and Edison, and a diverse world of sensors are making the IoT a great toy box for developers in all these areas. In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists discussed what things are the most important, which will have the most profound...
As organizations shift towards IT-as-a-service models, the need for managing and protecting data residing across physical, virtual, and now cloud environments grows with it. Commvault can ensure protection, access and E-Discovery of your data – whether in a private cloud, a Service Provider delivered public cloud, or a hybrid cloud environment – across the heterogeneous enterprise. In his general session at 18th Cloud Expo, Randy De Meno, Chief Technologist - Windows Products and Microsoft Part...
How will your company move to the cloud while ensuring a solid security posture? Organizations from small to large are increasingly adopting cloud solutions to deliver essential business services at a much lower cost. According to cyber security experts, the frequency and severity of cyber-attacks are on the rise, causing alarm to businesses and customers across a variety of industries. To defend against exploits like these, a company must adopt a comprehensive security defense strategy that is ...
The IoTs will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, will demonstrate how to move beyond today's coding paradigm and share the must-have mindsets for removing complexity from the development proc...
In the rush to compete in the digital age, a successful digital transformation is essential, but many organizations are setting themselves up for failure. There’s a common misconception that the process is just about technology, but it’s not. It’s about your business. It shouldn’t be treated as an isolated IT project; it should be driven by business needs with the committed involvement of a range of stakeholders.
In today's enterprise, digital transformation represents organizational change even more so than technology change, as customer preferences and behavior drive end-to-end transformation across lines of business as well as IT. To capitalize on the ubiquitous disruption driving this transformation, companies must be able to innovate at an increasingly rapid pace. Traditional approaches for driving innovation are now woefully inadequate for keeping up with the breadth of disruption and change facin...
SYS-CON Events announced today that EastBanc Technologies will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. EastBanc Technologies has been working at the frontier of technology since 1999. Today, the firm provides full-lifecycle software development delivering flexible technology solutions that seamlessly integrate with existing systems – whether on premise or cloud. EastBanc Technologies partners with p...
SYS-CON Events announced today that MangoApps will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. MangoApps provides modern company intranets and team collaboration software, allowing workers to stay connected and productive from anywhere in the world and from any device. For more information, please visit https://www.mangoapps.com/.
The cloud era has reached the stage where it is no longer a question of whether a company should migrate, but when. Enterprises have embraced the outsourcing of where their various applications are stored and who manages them, saving significant investment along the way. Plus, the cloud has become a defining competitive edge. Companies that fail to successfully adapt risk failure. The media, of course, continues to extol the virtues of the cloud, including how easy it is to get there. Migrating...
SYS-CON Events announced today that Catchpoint Systems, Inc., a provider of innovative web and infrastructure monitoring solutions, has been named “Silver Sponsor” of SYS-CON's DevOps Summit at 18th Cloud Expo New York, which will take place June 7-9, 2016, at the Javits Center in New York City, NY. Catchpoint is a leading Digital Performance Analytics company that provides unparalleled insight into customer-critical services to help consistently deliver an amazing customer experience. Designed...
SYS-CON Events announced today that Super Micro Computer, Inc., a global leader in Embedded and IoT solutions, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Supermicro (NASDAQ: SMCI), the leading innovator in high-performance, high-efficiency server technology, is a premier provider of advanced server Building Block Solutions® for Data Center, Cloud Computing, Enterprise IT, Hadoop/Big Data, HPC and ...
18th Cloud Expo, taking place June 7-9, 2016, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterprises are using some...
@DevOpsSummit taking place June 7-9, 2016 at Javits Center, New York City, and Nov 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with the 18th International @CloudExpo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world.